2015 Business Retention & Expansion Survey. Executive Summary
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1 2015 Business Retention & Expansion Survey Executive Summary Clay County Economic Development Council Jim Hampton, Executive Director Maximizing Economic Well-Being and Opportunity in Clay County, Missouri
2 2015 Business Retention & Expansion Survey Executive Summary With the assistance of the Global Business and Entrepreneurship students of the rthland Center for Advanced Professional Studies, the Clay County Economic Development Council conducted extensive surveys with the executives of 152 existing Clay County businesses by means of one-on-one confidential interviews during the past twelve months. This is the twelfth consecutive year that the Business Synchronist Information System has been employed to increase and enhance retention and expansion efforts in Clay County. The Business Synchronist Information System questionnaire was developed by Blane, Canada, Ltd., of Chicago, and has been tested nationally and is employed in 39 states and provinces. The Synchronist System forms the basis of the Kansas City metro-wide Business Retention Council program. Nationwide, over 900 economic development organizations now use Synchronist to provide an accurate picture of business retention and expansion opportunities. The Synchronist Survey is a structured business information system focused on understanding a business through the use of four tools: Problem identification questions Predictive questions Marketing intelligence Business assessment The result is hard data that provides information designed to help answer specific questions of concern to every economic development decision-maker and community or government leader. These questions include: What is the company s value to Clay County? Is the company at risk of relocating or downsizing? What is the growth potential of the company? What is the company s orientation to technology? What is the company s level of satisfaction with Clay County and its services? Do any existing or emerging problems in the community pose a threat to existing or potential businesses? Are there untapped marketing opportunities (e.g., industries, companies, strategies) that could be leveraged for attracting new businesses to the community? Participating Clay County businesses are assured that company-specific information will be kept strictly confidential. The results are honest and accurate information on the overall business climate and the specific needs of Clay County businesses. 1
3 In addition to providing more than 300 different reports about 130 business issues in Clay County, the Synchronist instrument serves as a contact management system for follow-up activities and relationship building with Clay County businesses. The data from these confidential interviews is entered into a system that analyzes the responses to provide information on the status of business as a whole in Clay County and identifies issues that need to be addressed as a county to create and support an environment where businesses can succeed. This data also provides decision-makers critical insight for allocating resources and creating public policy by identifying growth companies, predicting companies at risk, and forecasting economic investment. The businesses surveyed in 2014 covered the geographical spread of Clay County, representing a diversity of businesses. In 2014, for the eighth year in a row, there was an increase in surveys conducted in Smithville, Kearney, Gladstone, rth Kansas City, and Excelsior Springs. The respondents in the twelfth survey again represented a wide variety of Clay County businesses manufacturing, retail, and service. They range from a sole-proprietorship to employee bases of two to 3,330. Nationally, 4 in 5 small business owners are self-employed with no other employees. Nationally, 89.8% of all businesses have fewer than 20 employees, and it is significant to note that 88% of the 17,542 Clay County businesses have fewer than 20 employees. Nationwide, small businesses create a new job every 7 minutes, and a new small business opens every 37 minutes. Included in this survey are start-ups, emerging firms, and long-established businesses, with longevity ranging from 4 to 174 years, with 13 firms exceeding 50 years, and 11 exceeding 100 years each. Year Established in Community After % Before % % % % % 2
4 Employee Total % % % % % % Business Expansion In spite of a perceived slow recovery, Clay County businesses continued to grow and, most importantly, are positioned for future growth with improving economic conditions. While growth had slowed, 2014 results indicate local firms continue to grow and report conservative expansion plans and anticipated future growth. The majority identified their greatest achievements in the last three years to be growth, expansion, launching of new products and services, and increased customer services and retention. For only the fifth time in the 12 years of this survey, retention of businesses and customers was reported as major achievement. The uncertainty of the economy was a catalyst for many to undertake successful planning, reorganization, and introduction of new products and services. 3
5 Does the Company Plan to Expand in the Next 3 Years? 55% 45% Additional areas of achievement that auger well for continued development and expansion include improved customer service, survival of the credit crunch, new products, technology advances, and community involvement. Business facilities are also in place for expansion with 83% in good to excellent condition, and 45% reporting room for expansion, both up from Housing permits for 2014 increased significantly with Clay County issuing the third highest number in the Kansas City metro, with Johnson County first and Jackson County second. Condition of Building Good 44% Average 14% Fair 2% Excellent 39% Poor 1% 4
6 Room for Expansion 55% 45% Nearly half of the businesses reported plans to expand in the next three years; more importantly, these companies project more than $2,660,885,000 in capital investment and the creation of 293 new jobs by Economic recovery, along with attractive real estate and construction prices, are major factors in the optimistic projections. 5
7 Technology Impact It is not surprising that a large majority of companies of all sizes and in all areas report heavy investments in new technology. New and advanced technologies are emerging for 58% of the companies, and these technologies will change either their product or how it is produced or marketed. This figure represents a dramatic decrease of 18% from It is significant to note that 16% of the respondents report that the county s technology infrastructure is not adequate to meet their needs. Community's Technology Infrastructure Adequate 84% 16% 6
8 International Business Trends The markets for Clay County companies in 2014 reflected a continued reliance on local market emphasis but with slight increases in national and regional market shares. The international market share had a small uptick to 3%. Primary Market: Local Primary Market: Regional 52% 30% 48% 70% Primary Market: National 11% Primary Market: International 3% 89% 97% 7
9 Legislative Issues The survey requests business executives input regarding pending federal, state, or local legislation changes what will either benefit or adversely affect their businesses in the next five years showed an improvement of perception regarding anticipated adverse effects, a total of 56%. Business leaders reported that legislative issues likely to adversely affect business are health care, Cap and Trade, Card Check, tariffs, bank and lending regulations, taxes, OSHA, EPA, FMLA, Medicare/Medicaid, Workers Compensation, and net neutrality. Anticipate Legislative Changes that will Adversely Affect Your Business in the Next 5 Years? 44% 56% Anticipated legislative changes that might benefit business increased, but primarily included lending regulations for small businesses, mortgage reform, sales tax collection procedures, energy savings tax credit, health care reform, tax credits, and TIF reform. Anticipate Legislative Changes that will Benefit Your Business in the Next 5 Years? 71% 29% 8
10 Community Evaluation Business executives continue to give Clay County high marks as a place to do business. Diverse economy, location, workforce, educational system, population growth, quality of life, and community pride continue to be identified as primary strengths, followed closely by stability of business ownership and management, low cost-of-living, cooperation, and a low crime rate. For ten consecutive years, there have been increasing requests for coordinated planning among all Clay County governmental entities county and municipal, including user-friendly codes, regulations, and permitting processes that are transparent. The need for this coordinated planning has been identified as a serious weakness. The issue of coordinated planning is related to strong concerns for a progressive outlook and cooperative leadership by county elected officials. Additional areas identified as needing attention include infrastructure, especially county roads and bridges, image, bureaucracy, regional cooperation, Class A office space, high-end housing, and public transportation. Public Services The quality of public services rated high among existing industries, with 99% rating police protection and fire protection good to excellent. The areas of concern centered on public transportation, zoning changes/building permits, regulatory enforcement, and property tax assessment. Schools and the entire educational system continue to receive very high evaluations. Overall, Clay County public services in 2014 were rated above the national average, but County services dropped below the national average for the first time. 9
11 CLAY COUNTY NAT. Police Protection Fire Protection Ambulance/Paramedic Health Care Services Child Care Schools (K-12) Tech College Community College Colleges & Universities Public Transportation Traffic Control Streets & Roads (local) Highways (state & federal) Airline Passenger Service Air Cargo Service Trucking Property Tax Assessment Zoning Changes/Bldg. Permits Regulatory Enforcement Community Planning Community Services N/A County Services Chamber/Business Association Economic Development Council Workforce Services N/A Comprehensive Average
12 Workforce The Clay County workforce continued to be rated very high with regard to availability, quality, stability, and productivity. On a scale of 1-7, with 7 being high, Clay County employers ranked workforce On this scale, 3.5=average, 4.0=above average, 5.0=good, 6.0=excellent, and 7.0=perfect Availability Quality Stability Productivity Comprehensive Average Up slightly from 2007, the projection of stable and increasing employment opportunities at the 95% level indicates that the Clay County employment picture has stabilized. Employment Needs Increasing 35% 40% 32% 31% 34% 11% Stable 62% 60% 68% 67% 64% 84% Decreasing 9% 0% 0% 2% 2% 5% Increasing/Stable 91% 100% 100% 98% 98% 95% Major areas of employee recruitment needs included sales, math skills, nurses, industrial maintenance, loan officers, security personnel, chemists, Eligibility Verification System attendants and management, part-time tellers, HVAC technicians, computer technicians, management, welders, accountants, beverage servers, automotive technicians, online sales, customer service, and sheet extrusion operators. Since 1995 retail, health care and food accommodations have created the most jobs. It is important to note that the U.S. Department of Labor Bureau of Labor Statistics predicts that service jobs in the areas of educational services, health care, and social assistance will continue to account for the lion s share of job growth. Personal health care will grow at a rate of 11%. Construction jobs are predicted to continue to lag, and manufacturing positions will decline by about 5%. Nine in 10 of the fastest-growth occupations are forecast to be in computers and health care. Currently, one in six workers in Missouri is in health care. In Kansas City metro, 125,000 are employed in the health care industry. The Missouri Strategic Initiative for Economic Growth task force has predicted that the state s fast-growing industries for the future include transportation, information technology, and financial services, along with aerospace and defense manufacturing, energy solutions, biosciences, and health science. The Bureau of Labor Statistics projects that as other industries decline and lose positions, the health care industry will continue to grow at an exponential rate. 11
13 In order to insure that the right workforce is available in the future, the educational and job training systems need to plan for training and retraining that will prepare for the changes brought about by advances in information technology and computerization. Six in 10 of the fastest growing occupations will require an associate s or bachelor s degree. The Brookings Institute reports that, on average, people need over thirteen and a half years of schooling to be employed. The Economist predicts that in 20 years half of all jobs will be taken over by machines, and, in highly automated industries, like the automotive industry this may affect 90% of the jobs. The rthland CAPS (Center for Advanced Professional Studies) program is gearing up to meet the need for expanded training in science, technology, engineering, and math in the public schools, with 28 students the first year and more than 300 students in the fall of Trends Twelve years of data now provide a picture of a number of trends and changes. The stable business and organizational climate continues as evidenced by little turnover in ownership and in top management, with ownership stability at 92%, advancing from 79% in However, merger and acquisition activity has shown a steady increase since 2005 and will be a negative factor in the future. Has the Company's Ownership Changed in the Last 18 Months or Is a Change Anticipated? Pending 1% 92% 7% 12
14 Merger, Acquisition, & Divestiture Activity Stable 0% Increasing 95% Decreasing 5% Sales and market share growth, though strong, had stabilized in Total company sales rebounded in 2006, increasing 13% over 2005, but sales declined in 2008 and An uptick in sales began in 2010, and that increase in sales continued in Sales and market share are generally considered to be influenced by research and development, and Clay County businesses have an opportunity to increase efforts in R&D, whether performed locally or contracted nationally through professional associations. Currently, the low level of funds budgeted for R&D by Clay County businesses has remained static since 2005, and, in 2014, 57% performed no R&D activities, a continued decline. Nationally, nearly half of American manufacturers are planning to double their research and development investment by Money Spent on R&D as a Percent of Sales <3 21% ne 57% % >6 8% 13
15 Projected utility needs have also stabilized, with the exception of Internet access and cellular service which have both been increasing since Positive labor conditions and union relationships have been reported each of the 12 years of this survey, with a slight increase in union membership reported since Union Representation 94% 6% This survey confirms that Clay County is maximizing economic well-being and economic opportunity, and business executives have identified the major strengths to be the diverse economy, population growth, quality of life, sense of community, workforce, quality educational system, low cost-of-living, and low crime rate. Primary areas of concern specified for improvement in 2014 included the need for a progressive outlook, cooperative leadership, and improved and expanded infrastructure. Future The goal of this project and the mission of the Clay County Economic Development Council remain to maximize economic well-being and opportunity in Clay County, Missouri, by attracting and retaining business and industry for the county and to promote a positive economic development climate. The information in this report provides an overview of the Clay County s strong and diverse economy and identifies areas of planning for our community s continued improvement, growth, and development. Prepared by W. Christian Sizemore, Director of Business Expansion Clay County Economic Development Council 1251 NW Briarcliff Parkway, Suite 25, Kansas City, Missouri Fax chriss@clayedc.com 14
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