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Economic development organization gets creative as need for its services rises, resources available decrease

Friday, May 14, 2010

Editor's note: Readers have asked questions about the effectiveness of Marshall-Saline Development Corporation, so staff writer Geoff Rands sat down the Executive Director Roy Hunter and board President Jene Crook early this year to learn more about how the organization works and what challenges it faces in attracting economic activity to Saline County. This article originally was published Friday, March 26, 2010, in the third Marshall edition of "Tough Times, Tough People."

Although the recession has touched the Midwest less harshly than much of the rest of the United States, it was a factor in the Saline County Commission's recent decision to cut much of its contribution to Marshall-Saline Develop-ment Corporation, leaving Executive Director Roy Hunter with fewer resources to help attract new businesses.

Because MSDC has only two employees, himself and Administrative Assistant Carolyn Pearson, "it's really hard to cut back on staffing," he said.

And, he added, as a nonprofit organization, MSDC has limited ability to earn money in ways "outside of the normal realm of doing business."

In fact, he said, the $130,000 operating budget MSDC had for 2009's fiscal year makes it "hard to run any kind of an operation off of that." But, so far, "We've managed to get by."

Hunter knows he needs to make budget cuts, and those cuts must "come from marketing, from our ability to get ourselves out there and for me to make marketing trips, go to conferences," he said.

He missed a recent Missouri Economic Development Council meeting due only to the budget, he said.

Missing out on the information offered in such conferences, including information about the economic climate in other communities and the activities of other economic developers, certainly doesn't help Hunter to attract new businesses or learn "what realm of companies might be in expansion mode."

"And we don't want to be on an island out here," he continued, "we need to be able to know what's going on around us and what's going on with our partners."

The lack of uniformity in poor economic conditions across America has led to an uneven playing field, said Hunter.

"They're throwing tons of federal funds at some of the states that are hit big on unemployment, and we can't compete with that," he said.

Although he prefers the unemployment rate in Missouri to what some other states are experiencing, it makes it difficult to "compete for new projects when there's lots of federal dollars being thrown at those communities that have vacant buildings, unemployed workforce ... to help them get somebody in."

"It just makes it a little more difficult for the few projects that are available right now, because there's not much going on," he said.

Courting expansion projects

The recession has made formerly viable projects inactive, said Hunter, "and they won't do anything until they feel comfortable that the economy has improved."

But new businesses are not where the jobs are, said Hunter.

"The majority of jobs are going to be created through expansions of existing companies," he said. "It's been that way for a long, long time."

Missouri has new programs -- which may go unfunded this year, said Hunter -- aimed at providing small businesses with incentives to expand.

"We ought to be helping those folks create more jobs," he said. "It's a whole lot easier to do that than it is to recruit."

When ConAgra Frozen Foods corporation was in a position to expand one factory, Hunter and the MSDC board worked "very, very hard ... for a good period of time" to help bring that expansion to Marshall, he said.

When ConAgra's corporate officials want to make some sort of expansion, they inform all facilities of that desire, and those facilities then compete for that expansion, he said.

In the end, it was a choice between Marshall and Russellville, Ark. Although Arkansas' wages are lower than Missouri's, through Marshall's use of Chapter 100 bonds to help finance the project, "that was enough to make us a better location than Russellville," Hunter said.

Chapter 100 bonds allow a county or municipal government to take ownership of real estate and equipment -- on paper only -- and thereby offer a company some degree of exemption from state and local taxes.

But through all of it, Hunter was dealing with a third-party consulting firm, rather than ConAgra personnel.

"We couldn't even rely on our partners at ConAgra to help us any" at that stage, he said.

It wasn't until site-specific matters were discussed that ConAgra personnel became involved, he said.

"So, that's 160 jobs that we got," he said. "It was as competitive as any other project that comes along."

Hunter's involvement in that expansion was six months, start to finish, he added.

The process
The process that Hunter begins with each new project can take years to complete, he said.

"Sometimes, you'll know really quick if you're in or out. ... They'll let you know in 30 to 90 days," Hunter said.

But after that, he doesn't know for quite some time, if at all, where Saline County stands. As he said, he usually does not.

"I've got files in there from 10 years ago that I was never told. It happened or it didn't happen," he said.

The gathering of requested information can take between 12 and 18 hours, he said, and it is usually requested on short notice, such as giving 36 hours for a response.

"And they all want something different," MSDC Board President Jene Crook added.

Most of the information requested regards cost for utility service at different usage levels, said Hunter.

When he begins a new project, Hunter usually does not know the name of a company with which he is communicating, he said.

"Most of the time, I deal through consultants, or through the state, who deals through consultants. Very seldom do I get a name and a company that I know," he said. "... John Doe with Ed's Manufacturing doesn't walk in the door very often and say, 'We want a project. We're thinking about building here.'"

The information to which he does have access generally regards the company's type, what sort of work would be done in the possible facility and the size and skill level of the employee base needed.

It usually isn't until a Saline County location remains in the final three locations under consideration that Hunter gets a chance for a face-to-face visit with company officials.

Sometimes, "you may be able to get them to tell you (the company's name), or at least be able to figure it out" during a site visit, he said.

This makes research for proposals more difficult, he said, "because sometimes, you're dealing with companies you're not sure you even want."

One recent example of this was a company looking to begin operation of a foundry.

Of course, he wasn't told it was a foundry, but was able to determine that fact because the requirements for a building included the need for two large smokestacks.

"The only thing you use smokestacks for anymore is foundries," he explained. And, because of the environmental impact associated with foundries, "you have to be real careful where you locate them."

So, although it would have employed "a good number of people," Hunter decided not to pursue the project.

He learned that he was correct about the facility's nature a short time later when two of MSDC's partner economic development groups were forced to pull their proposals "because they didn't have anyplace for it, either," he said.

Hunter generates many of the projects on which he works by tracking through industry associations on the Internet.

Once he finds a company that could be in a situation to expand in an area such as Saline County, it becomes a matter of finding a way to approach the company.

"That's why I think building our (Project Footprint) database is a tremendous asset to us," Hunter said. Once the database has entries for the whereabouts of, and contact information for, 10,000 Saline County graduates, "I'm going to have contacts all over the place."

He hopes that these contacts will help to provide him with information about the businesses he is investigating.

"If I'm dealing with a company out of Ohio, maybe I've got a graduate that's in that community, or around there," he said. "... Who's the manager? What kind of business? Are they good employers? Do people like them? Just those general things. And then, it makes it a whole lot easier to make physical contact with" a company official.

Once under consideration by a large company, the issue is rarely money, but what Saline County can offer the company that makes it more attractive than other counties.

"Then, it becomes strictly sales," Hunter said. "It's, 'How do we sell our community?'"

"Everybody thinks Marshall is the greatest place in the world to live," he said. "I think so. But the people in Chillicothe, the people in Warrensburg, and the people in Iowa, they all think the same thing. ... You have to feel them out and say, 'What's going to click with them?' Is it the school system, is it cost of properties, is it available workforce, is it inexpensive workforce?"

At that point, "it gets past the numbers," he said. "If you've made it that far with them, you're competitive with numbers, anyway, it's just a little break here or there."

The deciding factor becomes something hard to pin down, he said, and can be something like Jim the Wonder Dog.

"I'm not real proud of making our town famous for a dog, but if it works, it works," Hunter said. "Whatever seems to draw their interest."

Success stories
Although it is difficult to attribute a company's presence in Saline County to just one cause, Hunter listed five projects completed during his time as executive director that he considers MSDC success stories.

The Kansas City Power & Light facility in Marshall is here because Hunter successfully negotiated a way for KCP&L to provide its own power to the building, rather than Marshall Municipal Utilities serving it with electricity.

"We didn't create a lot of new jobs day one," said Hunter, but it brought in new people to the community, which means more income for businesses in the area. "And, as they retire, we're replacing them with people that live in our community. ... And they're all very good-paying jobs."

Monsanto Corn Research is another that Hunter claims as his own doing.

"We negotiated putting up a facility for them, because they were going to have to move," he said.

Although "it's not a large number of jobs" at that facility -- approximately eight full-time and five part-time positions -- "they're all good-paying jobs," Hunter said.

Another benefit reaped from this project is that MSDC leases the facility to Monsanto, he added.

"We make a pretty good net off of that," he said. "If you take that facility and (Union) Pacific's facility, that makes up about -- if you want to look at it that way -- 9 percent of my salary. ... That was the intent way back, was that we generate some of those kinds of incomes to offset tax dollars being used."

Monsanto used to store seeds in Columbia, Hunter said, but its bean-cleaning facility was expanded using MSDC's "spec building" to bring the storage facility here.

"It kept a lot of jobs here that would have left eventually. Keeps all that activity in Marshall, now. Does it create any jobs? Well, four or five. But, did it save some jobs? Yeah, it saved a bunch of jobs. And, it kept a really good company like Monsanto still in our community. They've spent hundreds of thousands of dollars updating their plant," he said.

Union Pacific workers used to simply "rent an old gas station around town someplace, and that'd be where they'd meet and leave from in the morning," Hunter said. "... We designed (Union Pacific's) facility, and we convinced Union Pacific that it was the best way to go."

Although the regular crew at that facility is small -- about five people -- "when the crews come in, they work out of that building," said Hunter.

"Those guys all get paid really well, and they got a good per diem, and they stay in our motels and they eat in our restaurants and they drink in our bars, and they bring a lot of money to town when they come," he continued. "So, that's been an asset that we don't often see, because they could have just as easily be staying in Boonville or Warrensburg and be doing the same work. ... It brings dollars into the community."

Hunter has also helped two cities in the county develop enhanced enterprise zones in recent years. The designation may not have immediate returns in terms of jobs or economic activity, but the zones are tools cities can use, giving them incentives to offer companies that might locate or expand in the defined area.

The Slater City Council approved its enterprise zone late in 2009.

Hunter helped the city of Marshall successfully apply for an enhanced enterprise zone in 2007.

But as Hunter said at the time, the incentives should be attractive but not at the expense of existing taxpayers.

"It's not a freebie," he said when Marshall's application was approved. "If we're giving something to them, we want them to give something back. Everybody who locates here should be asked to participate in our community."

The job retention challenge
Hunter was also in contact with Cargill -- then called Excel -- all through the closure of its slaughter facilities, doing so without knowing the shift from slaughter to processing would happen.

"The only reason they shut it down was they couldn't get enough employees," he explained.

MSDC's involvement came at the request of Marshall government officials, Hunter said.

Hunter was part of an effort to draw employees in from nearby areas with high unemployment, purchasing advertising in those communities to make it known that both jobs and housing were available in Saline County, "and got zero -- I mean zero -- response," he said.

But, he added, looking outside of Saline County for workers is unusual for MSDC.

"Sometimes, we have to look for a particular skill that we don't have available. But we'd rather train our own folks if we have the time," he said.

At that time, Excel was "recruiting really hard, and they were recruiting Hispanics, because those were the folks who were willing to relocate," he said.

But, Marshall faced some difficulties in welcoming the influx of Hispanics to the area, Hunter said, and he also worked to deal with those.

"We had one (English as a second language) teacher in Marshall when we first went to the school system. And local businesses weren't communicating with the Hispanic community," he said. But within a year of Hunter becoming involved, there were four ESL teachers in the district.

For about a year, MSDC also set up once-a-week meetings between the Hispanic community and local businesses to try and improve communications between the two groups.

"We'd bring in different business people; we'd bring in car dealers and said, 'just come and say "hi" so they know your face,'" he said. "'... At least they'll know who you are. ... If you seem honest to them, maybe they'll come do business with you.'"

But, when it finally became obvious Excel couldn't keep all three shifts active, the slaughter facility closed, despite MSDC's efforts.

"We went from 900 and some employees ... to zero," except for a few managerial staff, Hunter said. "But they knew then that they were going to go in to further processing, so they tried to keep some folks available. They got back up to 400 ... within 180 days."

Working hard, getting close
"It's a difficult sales job to convince a company to move or to expand in a new area. ... You don't score on every try. And I wish it were possible to show the general public all of the businesses that we've worked with and all of the times we have come 'this close,' only to lose out to another location for various reasons," Crook said.

One of those projects, said Hunter, would have been a Gatorade-producing plant that would have employed between 400 and 500 people, and Marshall was one of the final two locations under consideration.

At that time, he had a meeting with the man responsible for site location, known to Hunter only as "Russ."

"That was all he'd tell me," he said. "I still have not found Russ at Pepsi Cola, and I've tried."

The reason why Marshall made it to the final selection was simply the access to plenty of water, said Hunter.

"It's a tremendous asset people don't realize we have," he said.

Russ was pleased with the site, Hunter said, "and we had everything they needed, except empty trucks to haul their product out. They were going to have to deadhead from Kansas City to here to load up Pepsi products and haul them off."

That cost of driving empty trucks from Kansas City to Marshall turned out to be the deciding factor, he said, and the project went to Oklahoma City.

But, he said, "The only thing we could have done is move Marshall closer to the trucks."

"That one was a heartbreaker," added Crook.

"They were nice people to do business with, they were honest, they kept me informed as to what was going on and where we were in the process," he said. " ... But nobody knows about that except the board," because Hunter had signed a nondisclosure agreement, which he typically does when he begins working on a new project.

Limits on public information
Such agreements prevent him from even speaking to board members about the project's specifics -- those that he knows -- unless those board members also sign nondisclosure agreements, which he does not request that they do "except on a one-on-one basis as necessary," he said.

"There's so much information out there that, if you slip and say something maybe you shouldn't, or your spouse overhears a telephone conversation ... and says something about it," he said.

"But (the Gatorade plant is) the kind of thing you'd like to let people know of, and you just can't," said Crook.

"And there's a pretty long list of those 'we-didn't-get-'ems,'" said Hunter.

But, he said, he knows exactly why companies don't tell him much, and work to ensure that what they do tell him stays with him.

Once a company's name is known as one interested in expansion, people in the area and surrounding areas will begin to contact that company.

"If you're a real estate broker in town, and this company may be looking for some land, maybe you should be in touch with them. And if you sell insurance, maybe you should be in touch with them," he explained. "... So, we just can't release that information, because they'd get pounded."

Helping entrepreneurs
MSDC recently began work with three local entrepreneurs, each seeking to start his or her own business in the county.

"Those are pretty easy to sit down with and figure out how much you can help them, and what they need to do to make it work," he said.

The most common thing local entrepreneurs look for, he said, is money.

"Unfortunately, there's just very little of that to go around," he said. "... It would be great if we had a fund that we could loan out of, but we've not been able to figure out how to do that, yet."

But MSDC can help them put together something they can take to a bank that will show the possibility for a return on the bank's investment, as well as talk to the entrepreneurs about the cost of doing business and managing employees.

The contact with local entrepreneurs is something that hasn't happened much over the past year.

Crook explained that MSDC grew out of Marshall Industrial Development Corporation.

The for-profit private corporation's board decided to call it quits when "they concluded they weren't getting anywhere" with their singular goal of attracting to Saline County big businesses capable of employing hundreds of workers.

"What we've come to conclude over the years is you don't want such high concentrations for everything," she continued. "I would not give up ConAgra for the world. I would not give up Cargill for the world. But you don't want all of your labor force concentrated in three or four large employers. And so, that's why we've gradually come to realize that the smaller businesses" should also be a focus of MSDC.

One reason local interaction, both with entrepreneurs and residents with connections to industry, is important is that that there are approximately 8,000 communities in the United States with economic developers, Hunter said.

"Every project that's out there, we're competing with 8,000 communities, unless, for whatever reason, they don't want to be in a particular part of the country," he continued. "... With very few projects out there, there's just tons of us after them. So, that's why we have to find our own. We have to find the Project Scorpions."

He learned of Project Scorpion, the code name for a business he has been in talks with regarding an expansion, from a local individual who knew about the company's situation.

"I wish more people would give me those kinds of leads," he said.

Contact Geoff Rands at marshallreporter@socket.net

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-- Posted by What the f...... on Mon, May 17, 2010, at 5:42 AM

Of the $130,000 annual budget, how much of that goes towards salaries?

-- Posted by What the f...... on Sun, May 16, 2010, at 8:50 AM
Response by Geoff Rands/Staff writer:
$78,000 of MSDC's budget goes toward salaries for Hunter and Pearson, he said.

all i heard in this article were excuses and promises ... as usual. what have these people done for us since this organization came into existence? NOT a good use of money. budget cuts are a fact of life now, and i think this is one that is screaming out to be cut. no results over the years.

good article though demo news, you answered a question we've all been wondering about - what roy hunter has actually done. the answer? NOTHING.

-- Posted by aikman8 on Sat, May 15, 2010, at 10:52 PM

Thanks Geoff.

-- Posted by Oklahoma Reader on Sat, May 15, 2010, at 2:45 AM

Geoff - this was a very good story!! Good job!!

-- Posted by pennypincher1 on Fri, May 14, 2010, at 1:43 PM

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