Destination Northland | Business Climate

The Northland’s business climate is something of a “good news/bad news” scenario. The bottom line, however, is that two out of three key measurements are positive, and the third appears to be improving.

The biggest negative about the region’s climate for business is probably that the four counties are located in Missouri. Although the state’s tax burden is among the lowest in the nation, its incentive packages bring considerable complaint from economic development quarters because they tend to lag behind some states. Overall, many believe that Missouri offers uncompetitive options that frequently offer outdated packages.

This negative appears to be improving. Not only are state leaders increasingly aware of Missouri’s position, but also they are moving toward solutions. Even in the short term, an increasingly aggressive state economic development office is working independently and with county leaders to improve the scenario. Although significant legislative action ultimately will be required, the situation appears to be improving. In other measurements, Missouri is extremely forgiving. The state overall consistently ranks in the lower one-third of all states in terms of corporate taxes.

Regionally, the Northland has nothing to apologize for. Buchanan, Clay and Platte counties, especially, feature aggressive and effective economic development offices backed by significant support from the public and elected officials. Although their operations, and especially their incentive packages, are monitored by the public, the overall value placed on job creation and local successes makes for a positive environment.

Several communities feature especially notable elements for businesses. With significant revenues from riverboat casinos, both Riverside and North Kansas City offer low taxes for corporate residents. Although businesses pay school and municipal taxes, Clay County operates without any property taxes and relies exclusively on sales tax revenues. Only Kansas City’s earnings tax for employees is somewhat unusual among local and county taxes.

Missouri’s business environment is extremely positive in some ways that help offset any disadvantage. The area’s favorable workforce and costs, such as transportation, mean net expenses for doing business here are positive. In fact, one study ranked Kansas City third nationally for distribution expenses among major cities. The study especially found solid benefits from Kansas City’s diverse transportation infrastructure, especially when combined with factors such as the local workforce.

This picture is even more positive when coupled with the wide range of choices for business location. North Kansas City and St. Joseph both offer traditional industrial sites as well as newer locations. Most communities have new business parks and some, such as Kansas City, have several with buildings that are ready to lease. The area is even home to one of the most unusual business sites in the world, the Sub-tropolis underground business park.

Business environments here excel in other ways as well. North Kansas City recently installed the first phase of a fiber-optic cable system that will offer high-speed Internet connections for every resident and business in the city. Community leaders there have set their sights very consciously on modern commercial and industrial growth to match their historic success.

In a similar step, Kansas City Inter-national Airport recently installed a high-speed network for business use. An even more aggressive plan is envisioned for airport development, which includes an extensive high-speed network as part of incentives for businesses that can utilize rapid transport and communication.

Relatively stable unemployment; fewer building vacancy rates and growing retail sales are all signs of the Northland's solid and in some cases spectacular economic climate. Especially when viewed against recent national and regional circumstances, Clay and Platte counties exhibit a positive outlook.

One factor is the area's position in relation to Kansas City. Like the larger community, the Northland exhibits a stable economy that remained steady even during 2001-2002. Clay and Platte counties have grown to a level that in many cases is generating its own momentum. Especially near strategic areas such as Barry Road at I-29 or I-35, growth appears to have achieved a self-sustaining level. Residential development and traffic is simply too great to avoid further expansion.

The Northland's economic climate is also typified by a relatively business friendly environment. Both Clay and Platte County operate aggressive economic development organizations. The Northland Regional Chamber of Commerce adds related programs for both areas.

Another aspect of this focus includes the relatively low business taxes in both counties. Clay County operates its core government services solely on sales tax funds, reducing total property taxes and other fees for most businesses. Both areas also work hard to minimize red tape and to gather business input on major decisions.

Clay and Platte counties also work hard to exploit available state incentives. Although many debate the adequacy of Missouri economic development incentives, Clay and Platte counties operate programs to ensure that their businesses can utilize those that are available. These include everything from tax exemptions on equipment purchases to enterprise zone tax credits.

Among the recent signs for business optimism was continued retail growth through most of the summer, 2003. This growth pushed sales figures to those of 2002 or above at most Northland retail outlets.

One factor in this increase simply involved the increase in choices now available to Northland shoppers. Dramatic growth of area retail locations brought greater variety in quality and cost. In simple language, many Northlanders made fewer trips south of the river for shopping because they could now find what they wanted north of the river.

Reflecting national trends, manufacturing activity also improved somewhat in June and early July after easing in the spring. Overall, production and new orders moved back above year-ago levels, and firms reported slightly higher levels of capacity utilization than in previous months. Both durable-and nondurable-goods producing plants shared in the increase in activity. This helped explain why factory employment levels remained largely unchanged following declines throughout 2002.

Home construction continued as one of the Northland's most active industries and this business health impacted everything from banks to suppliers. This trend was expected to continue and even increase with improvement in the area and nation's overall economy.

A recent report by the Federal Reserve Board in Kansas City found a health banking industry in the area and it was clear the Northland was part of that climate. Right on the heels of retail the area's strategic retail growth were banks and bank branches. In the hot retail area on Highway 152 west of Liberty, two regional banks have accompanied extensive retail development. These new financial establishments were an addition to the four nearby banks just east of I-35 in Liberty.

Labor markets still exhibited some decline in the region. The Northland was on pace with steady or increased unemployment in both Clay and Platte counties. Most managers reported few difficulties filling open positions, although some of the low demand may be due to seasonal adjustment problems. Wage growth remained largely unchanged, with most firms continuing to provide no more than cost-of-living wage increases.

In Clay and Platte counties, unemployment figures were between 4.3 and 4.8 percent, local highs but lower than both the regional and national levels. Both of these figures also reflected summer season unemployment. Annual averages were closer to 4 percent for both areas. By comparison, the seasonally adjusted unemployment rate for the Federal Reserve District was 5.4 percent in July. The national unemployment rate also declined to 6.2 percent.