Archive for Sunday, June 29, 2008

Have we peaked?

Stagnant job growth worries Lawrence leaders

June 29, 2008


Lawrence was on a roll.

The year was 2000, and economic development leaders were toasting not just a good year, but a good decade.

The shine had not yet worn off the $35 million Sauer-Sundstrand plant that had sprung from the East Hills Business Park landscape a year earlier. The company, now known as Sauer-Danfoss, was in the process of adding more than 100 new jobs to the Lawrence economy.

Gaze about a block to the east, and the dirt was still freshly turned on a 60,000-square-foot expansion of NCS Pearson. A block to the west, Prosoco, a manufacturer of cleaning products had moved its corporate headquarters from Kansas City. Across the street, Amarr Garage Door Group had doubled the size of it manufacturing plant in 1995 and had more expansions in the works.

Venerable Lawrence companies also were moving up. The likes of Allen Press, Packer Plastics and Reuter Organ had all undertaken expansions or were in the process of doing so.

It had been the Nifty Nineties.

Economic development leaders felt like they had found their way for Y2K. In 1997, city and county leaders even went so far as to set the goal of adding 20,000 jobs in Douglas County by 2020. The goal is an official part of the community's comprehensive plan, Horizon 2020.

Leaders were optimistic they had a good head start. The biggest fish yet was on the hook: A $45 million, 400,000-square-foot warehouse with 300 jobs had committed to build in Lawrence. The company's name was American Eagle.

In short, confidence filled Lawrence business circles like crimson and blue fills the Fieldhouse.

And today?

Well, crimson and blue is still in vogue.

"It is like short-attention span theater around here," Douglas County Commissioner Charles Jones said, citing his frustrations with leadership at the Lawrence Chamber of Commerce and a host of economic development initiatives that have been started but not finished. "Obviously, something has changed."

In search of 20,000

The numbers certainly have changed. In 2000, the goal of adding 20,000 new jobs by 2020 seemed like a slam dunk. From 1997 through 2000, the county added an average of 1,300 jobs per year. It was on pace to add nearly 30,000 jobs by 2020.

Now, the community is behind pace. How far behind is debatable. It depends on how you look at numbers complied by the Kansas Department of Labor.

But what isn't debated is that the 300 jobs from an American Eagle Distribution Center aren't in the numbers. That "big fish" flipped off the hook and swam down to Ottawa after major public opposition formed about wages the company proposed to pay and the amount of tax abatement it sought.

Then - following Sept. 11 - the city that once took quiet reassurance that its economy was fairly well insulated from the ups and downs of the national economy, found its layer of protection had worn mighty thin.

E&E; Display Group closed its plant that once employed more than 300. Honeywell moved its Lawrence operations to Johnson County, taking nearly 190 jobs. Davol closed its longtime medical manufacturing plant in 2002, eliminating 130 jobs. Farmland Industries went bankrupt and shuttered its Lawrence fertilizer plant, which employed 100. Nearby corporate neighbor Sprint also closed its Lawrence call center, eliminating 500 jobs.

The result is that Douglas County no longer is on pace to add 20,000 new jobs by 2020. From 1997 through 2007, the county has added 5,900 jobs. At that pace, the community would fall about 30 percent - or about 6,000 jobs - short of the 20,000 goal.

But some community leaders say the news is even worse. That's because from 2001 to 2007, the county's job growth rate has averaged out to zero percent. Despite a slow national economy, that average still is below the statewide job growth average, and the averages for the Kansas City and Wichita metro areas.

"It is like the game is played at a different level these days, and we're just not willing to compete," Douglas County Commissioner Bob Johnson said.

Seeking strategies

Deconstructing the downturn could be an almost full-time job. Opinions vary about what wrong turns the community took or what direction it needs to go now.

City Commissioner Boog Highberger, for example, said the city may have the wrong focus. Instead of trying to catch whales with a rod and reel, it ought to spend more time catching goldfish with a net. Highberger envisions putting out a request for proposals to existing Lawrence businesses. Ask them how they could add a handful of jobs to their companies, and then give city grants to the most worthy.

City Commissioner Rob Chestnut repeats a frequent concern expressed by economic development professionals: The community doesn't have enough industrial sites to show potential major employers.

"Having industrial development sites along I-70 is going to be absolutely critical to this community," Chestnut said. "It is a major transportation corridor that we have to take better advantage of."

Plenty of blame

But when it comes to bigger-picture reasons for why job growth numbers have stalled, three general themes emerge: lack of leadership; an abundance of debate; and a sense of complacency.

Jones has hammered on the leadership issue, and does not hide his disappointment with the Lawrence Chamber of Commerce. The city and county contract with the chamber to provide economic development marketing services.

He points to more than five years of talk about industrial development near the Lawrence Municipal Airport without results. He's frustrated the community hasn't figured out how to convert the former Farmland Industries plant into a new industrial area, despite five years of talk. An 87-acre site near the East Hills Business Park has sat untouched for about 10 years. Creating a true incubator site for promising start-up companies has been talked about for the better part of a decade, too.

He said much of the blame lies with the chamber's "inability to focus and set priorities."

"Those who want to hide behind the anti-business part of the community are just deceiving themselves," Jones said. "It is really the business community that has failed as much as anybody to articulate a vision and focus on getting something done."

Mike McGrew, chairman of the chamber's economic development committee, did not take major exception to Jones' comments. But he said changes probably needed to happen in the political arena as well.

McGrew thinks the city's reputation with site selection companies took a hit with the American Eagle controversy. That deal fell apart at the City Commission level. He also said the city-approved living wage requirement for companies receiving tax abatements - although well-intentioned - may be sending a poor message to potential employers.

But a bigger issue is the tendency for projects to become bogged down because there is less than unanimous support for an idea, McGrew said.

"We have a great history of debate and analysis, but our follow through and willingness to go ahead on a 60-40 deal has been lacking," McGrew said. "A 60-40 vote in a federal election is a landslide. In Lawrence, it seems like it is 40 percent short of what we need to move forward."

Johnson, who believes there's plenty of blame to go around, said the community had become complacent because of a robust real estate market. The annual increases in home values led to new revenue that negated the need to raise taxes.

That's not the case today. When the most recent housing bubble burst nationally, Lawrence's market lost considerable air too.

"What's happening to us now is the real world," Johnson said. "What's facing us now, has been facing lots of communities for years.

"The good news is I think we're at least now stepping up and admitting what is going on."


Richard Heckler 9 years, 6 months ago

"Eventually, we're going to have to find some means of keeping score other than growth, growth, growth."ditto dittoSuch as how can Lawrence provide more economic growth from existing resourcesInstead of so much effort being directed at putting existing retail out of business how can Lawrence enhance its' current retailers*Recognizing there is not an obvious demand for more warehouse space. The NEW 600,000 square foot warehouse at East Hills which has been vacant for 10 years could be an indicator.

Silly_me 9 years, 6 months ago

A big problem is that when local business organizations and the city attempt to stimulate growth, they fail to follow through during the fragile early stages to make sure a targeted fledgling business will survive. As an example, I was told of a local business several years ago that started to expand it's product offering and had grown it's workforce from a 1 man shop to 10+ and with a lot of potential for much greater growth. However, this company got caught in a "patent sweeping" sting where a lawsuit was brought against them on patent infringment that was on the thinnest of threads applicable to their business. The problem was that they didn't have the revenue to fund a drawn out patent fight and were thus forced to settle, even though the presiding judge felt they would have one their case easily. The city of Lawrence and the state did nothing to help this business and they ended up having to lay off all of their employees because of this patent fight. If the city would have invested some $s to help with the legal case, this business would probably stil be growiing. These jobs are also of the higher end, professional/technical type that are so coveted. The city and the state need to realize that they just can't help get a business going..if it shows promise it also needs nurturing..thus the term incubator.

Fred Whitehead Jr. 9 years, 6 months ago

"Leadership". That is the question. In Lawrence, we have none. We have a citizenry who really doesn't give a fig about city government, and as a result, this is what we get. Nothing. City commissioners who are indifferent to problems, who are blind to input, who do their best o ignore serious situations and shove it off on the city staff. Not oneof the current crop of elected officials is worth an ounce of salt, not one is competant to truly deal with problems and respond to public input about serious deficiencies in the city orginazation. They just rubber-stamp the city staff orchestrated by the city manager. That, folks is the problem. Are you going to continue to ignore it? Probably, as I have seen this situation for many years, and it has never been worse than it is right now.

Chris Ogle 9 years, 6 months ago

Right-On centerville..all of us start somewhere.. and all of us creat our own destiny.....if our community allows it!

Centerville 9 years, 6 months ago

HawkPerchedatRiverfront:You're on to the nub of the problem. This community is made up disproportionatly of tax consumers, rather than tax producers. Appraisal creep can't make up for the loss of tax revenue from profitable business. Some think we should turn up our noses at 'warehouse' jobs. Some of those are entry level, true, but it's a good start for anyone who is new to the job market and wants to begin supporting him/herself. No one stays at minimum wage in this country unless he/she wants to.

BigPrune 9 years, 6 months ago

Notice that good things happened in our community when everyone was NOT trying to build "consensus?" THAT'S what happened.

Jeff Kilgore 9 years, 6 months ago

A KU education, or any college education, does not automatically result in a good or even high-paying job. I'm a liberal arts major from ESU and I feel fortunate to have the teaching position that I have. I can't speak for the toplikar guy above, and there may be a glut of people in math/science/tech/eng/ fields who can't find work, but I don't have any statistics in front of me and don't know. Will no one but me address the FACT that our economy is suffering and will continue to suffer as long as we are willing to throw 2,000,000,000,000 into the Iraq war? This is not a political question, but an economic one. How many defense contractors have made their home in Lawrence? Still, who wants to grow? I live a county away, but if Lawrence's population were any bigger and you became a little KC or the same size as Topeka, what would you have gained? Be careful what you wish for. Growth doesn't necessarly mean high-paying jobs, and if it's growth combined with barely livable wages, then the labor glut worsens and the city loses.

Richard Heckler 9 years, 6 months ago

The focus was on a bedroom community which did in fact raise property taxes at more than COLA which is 3%-4%.... Lawrence rates were consistently at 6%-11%. This is consistent with bedroom communities.If residential growth paid for itself and was financially positive, we would not be in a budget crunch. But with increased numbers of houses you have increased demand on services, and historically the funding of revenues generated by residential housing does not pay for the services, they require from a municipality. This is no secret and has been pointed out frequently over the past 20 years.In order for the city to have orderly growth, developers need to be responsible for a certain amount of the infrastructure. Most builders understand impact fees or excise taxes are for a purpose that improves their big profit making developments.The chamber has been run by the real estate/developer community whose plan appeared to be to make bundles of money for themselves. The city/county commissions over the past 20 years have been the who's who in the real estate/development community. The problem has been known as conflicts of interest. The planning commissions have been run by their puppets. Developers Emergency Party by First Management city fails to demand a variety of economic impact studies be preformed on every development project. Instead the tool is whether or not it sounds or looks goodwhich are not indicators as to whether or not projects will overload the retail community,overload the residential market,bring upscale jobs to the community or create NEW economic growth for the entire community. Blaming the living wage is irresponsible. That wage is not a lot of money.

BigPrune 9 years, 6 months ago

What REALLY happened? I'll tell you what happened...the City of Lawrence caved to the anti-corporate American kooks. THAT'S what happened.Jones should be blaming his supporters. They are the ones that stigmatized our community with the American Eagle debacle and the so-called Living Wage (let's not create any wages) law.I can blame the Chamber for one major blunder after the American Eagle debacle - they decided to embrace the kooks (so we could have "consensus," it sounds so touchy feely) and include them in major policy like ECO2. There needs to be two organizations without any overlapping - The Chamber of Commerce (who advocates for small business and is against taxes), and The Chamber of Non-Commerce (who hates business and loves taxes). Building "consensus" needs to be thrown out the window. Notice that good things happened in our community when everyone was NOT trying to build "consensus."That's what went Send out questionairres to every new start-up business, business that comes to Lawrence, and every business that tries to expand. Ask these businesses if they had an enjoyable time working with the City. Make the questionairre anonymous, and send these questionairres to an impartial third party that can put together a quarterly or yearly report so the citizens can hear if Lawrence is a wonderful community to do business with, or, if we need major improvement.

Flap Doodle 9 years, 6 months ago

"...nothing you can do about it..." seems to be someone's current go-to catchphrase.Stillhavingawonderfulinternetlife&thereisnothingyoucandoaboutit.

Richard Heckler 9 years, 6 months ago

  1. The Lawrence,Kansas SmartCode eliminates both public notice of a development plan and public input on a development plan. 2. Planning staff have repeatedly failed to inform neighbors of actions to be taken that affect surrounding properties (e.g.: the initiation of annexation at I-70 and K-10 being a very recent example, neighbors only learned of the action when the City Commission agenda became public, 5 days prior to the City Commission action).3. Planning staff have repeatedly ignored requests for information from members of the public on development proposals (e.g.: requests to see the revised Smartcode were rebuffed even though consideration of the revised Smartcode was schedule for action by the City Commission).The approach of the planning staff is all to often one of facilitating the efforts of developers and ignoring the interests of the community as a whole or the concerns of individual neighborhoods.1. Either drop the Smartcode altogether or include provisions that mandate:a. Timely notification of neighborhoods of any development plan that is working through the process,b. Opportunities for the public to make comments and suggestions on the development plans,c. Include members of the public in the review process, andd. Permit members of the public to appeal decisions of the Consolidated Review Committee to the Planning Commission and the City Commission.2. Call for the planning staff to recognize that their clients are the citizens of Lawrence, not the developers. Call for assessing the work of the planning staff by how well they uphold the community's plan and not how well they please the developers. I am sure that there are many other issues that can and should be raised. (For example, the use of public incentives in economic development needs our input and attention.) However, I feel that the crucial issues are: informing the neighborhoods of development actions; receiving and responding to input from the neighborhoods; and recognizing that the goal of planning is to preserve, protect and enhance neighborhoods, not to make developers happy.

over_par 9 years, 6 months ago

"It is like the game is played at a different level these days, and we're just not willing to compete," Douglas County Commissioner Bob Johnson said.Are we really just finding this out? We have operated this way forever. Everytime something comes up for potential growth, we have people come out of the woodwork to cry about it. Unfortunately, in Lawrence if you cry the loudest you usually get what you want.

1wetwilly 9 years, 6 months ago

Choose Lawrence: where 1,600 square foot houses on concrete slabs cost more than 2,200 square foot houses with basements in Olathe, Topeka, Blue Springs or Lees Summit. Choose Lawrence: where the majority of local employers like Berry Plastics, Sauer-Danfoss, Hallmark, Pearson, Schlumberger and Amarr pay $10.00 to $12.00 an hour or less...a typical employee can't qualify for one of those slab homes by working for these employers. Choose Lawrence: where 50% of working residents commute 60 to 100 miles a day away from Lawrence to make more than a typical local employer pays.Choose Lawrence: WHY?

deskboy04 9 years, 6 months ago

High gas prices will hurt Lawrence more than anything else.

average 9 years, 6 months ago

The UN estimates that the world population will reach stablity, probably under 10 billion, some time within this century.US population growth is shrinking, and the US population will reach a stable number within 40 years. Kansas within 25 years.This is a very, very good thing, considering the size and resources of the planet.Eventually, we're going to have to find some means of keeping score other than growth, growth, growth.

Bossa_Nova 9 years, 6 months ago

this is what happens when socialists try to run the local economy. good thing for lawrence, its got tons of state and federal tax dollars coming in to support the university business. if it werent for the university lawrence wouldnt exist.

gccs14r 9 years, 6 months ago

Finally Godot comes to his senses and realizes that letting the developers set City policy for the last 20 years was a horrible mistake.

poop2scoop 9 years, 6 months ago

The local circumstances and the increasing price of gas will shift Lawrence into a dichotomy of university town and severly distressed, but high-priced ghost town within a few years.

Chris Ogle 9 years, 6 months ago

What will happen when over priced real estate starts selling at true market value?? Comps will tell the story, and then we will either live within our means, or raise taxes even more. It's time to make a common sense decision. . If you can't afford it...... Wait....That is what most of us do!

KsTwister 9 years, 6 months ago

Lawrence keeps 'looking down the road' without first looking at the road. At their heights the business that left Lawrence took more than this articles stats. They always downsize before moving,therefore Honeywell went from 500 jobs and Davol at more than 300. Pearson cut many also but when some contracts closed but those were not taken into account either.

getserious 9 years, 6 months ago

When you have a government, whose leader(mayor) changes every year, instead of 4, you can get nothing done. Potential businesses who deal with one person for a year, suddenly have to deal with another with different views the next. Also, hard to have any serious credibility when your Mayor is named "Boog"

Matt Toplikar 9 years, 6 months ago

After living in Lawrence for 25 years, I moved away-- not because I didn't like the town or couldn't find a job-- but because I couldn't find a high-paying, professional job with benefits. This seems to be a clarification that often goes overlooked. In other words, we're a bit too preoccupied by the quantity of jobs (which is admittedly important), and not focused enough on the quality.In a town that's economy and culture largely revolves around a college, there needs to be more opportunities for graduates to put their skills and expertise to work. Unfortunately, someone who just spent 4 years and thousands of dollars at KU will not want to waste their time as a telemarketer or a warehouse worker.As much as I love Lawrence, it would break my heart at times watching the abundance of highly educated, hardworking people just struggling to get by.On a side note-- The idea put forth in this article that the debate over the state of Lawrence's economy is the reason for its problems is both unsettling and obtuse. If anything, there seems to be a lack of honest debate and an excess of disingenuous/ungracious arguing. Hinting that we should lessen our discourse about a particular topic seems a bit shortsighted to me. If one side is told to shut up or if the other side simply doesn't listen this leads us down a path toward something that looks pretty undemocratic. That's my two cents anyways.

Jeff Kilgore 9 years, 6 months ago

Growth. No growth. Loss of growth. The population is growing, right? It seems that eventually, Lawrence will grow with opportunities. Or is something else at work that we can't see? Maybe we should look harder at what is really happening. We live in a global economy today in a much broader way than just 10 years ago. Besdies, what do you get with growth? More pavement, more electric lines, more concrete, less vegetation, more strain on utilities. . . Yes, more tax base, but this is offset by more people using the tax base. I don't agree with "you're growing or dying." If Lawrence citizens want higher wages, MOVE. No laws force people to live anywhere, right? Still, you'd be leaving a beautiful community for somewhat higher wages. You don't move because it's not worth it. Do with less. That isn't the American way, but it wouldn't hurt us. The average US citizen weighs 25 more pounds than in 1964. Look around. It ain't muscle! How many of us own 30K SUVs and trucks and boats, etc and really don't need them? And how many have a cell phone/tv/game station per person? I don't think Lawrence is the problem. . .

poop2scoop 9 years, 6 months ago

Irrespective of the cause, the past 10 to 15 years have produced the following current circumstances in Lawrence: 1.) The prevailing locally sourced wages are less than $24,000.00 a year.2.) A single family house typically cost 50% more than in surrounding cities/counties.3.) Whether a house lists for $100K or $500K, Lawrence real estate has developed a cheap, shoddy reputation. 4.) Crime and safety is an increasing problem. Shootings, assaults and robberies are fastly becoming common-place. Lawrence is a major drug trafficing town, too. 5.) The school district is faultering even after substantial physical improvements.6.) Local city/county government is increasingly known for self-serving, cronyism while local services and infrastructure deteriorates.These circumstances, among others, combined with the "tipping point" of high transportation costs for simply getting to & from Lawrence will cause a steady migration- both commercial and individual, away from Lawrence.

Godot 9 years, 6 months ago

The decline of Lawrence began when the agenda of a particular political movement began to infect, and succeeded in controlling, local government.

David Albertson 9 years, 6 months ago

Let's not forget the flat population growth.

Richard Heckler 9 years, 6 months ago

Want new industry: My challenge to the Chamber of Commerce and City Hall is to reach out to this new light industry to establish a bright new future for Lawrence,Kansas. This is one of the hottest new industries in some time. are not light industrial they are low wage going nowhere jobs. Warehouses should classified as warehouses instead of being allowed to hide behind the mask of light industrial. No one in Lawrence knows whether or not not the I-70/K-10 warehouse project will pay back the community or not because it is nothing but local speculation. The same can be said for the North Lawrence project.

jumpin_catfish 9 years, 6 months ago

The no growth leaders agenda is working like a charm, they should be proud! Speaking of charm, isn't Lawrence a charming little town. But charm won't mean a lot with no tax base and our kids leaving because there is no work. Sad!

KS 9 years, 6 months ago

You don't have to pay a toll to get on or off the interstate in Ottawa. The airport idea is a bust from the beginning. Why pay more when other areas are free regarding tolls? Not completing the SLT is another MAJOR hit to expansion. You have to be able to get in and out easily or they just aren't going to come. Who wants to pay $4 a gallon for fuel just to burn it up while waiting at a traffic light on 23rd?

BigPrune 9 years, 6 months ago

Godot must be referring to the Regressive Lawrence Cancer. It certainly metastasized.

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