Rural Kansas Uses Best Attributes to Woo Industry

By Laura Corbin

Don't rule out rural Kansas communities when it comes to competing for industry. Often, they have everything a company could want and more.

"Rural areas are very competitive," said Kent Heermann, head of the Regional Development Association of East Central Kansas. "A lot of times, the incentives we're able to offer are the closers on a deal. For a company to locate anywhere, whether it's rural or metropolitan, it obviously has to make good business sense for them, but rural areas often are more able and more willing to offer incentives that clinch the deal."

Heermann's area has benefited greatly from having just what business is looking for--an available labor force, workers who have a good work ethic, available land at a good price, well-designed infrastructure--along with some very favorable incentives.

Caterpillar, for example, began production in the fall of 2000 in its new 115,200-square-foot manufacturing facility in Emporia, Kansas, located in Heerman's region. The plant employs about 30 people now, but will be up to at least 100 very soon, Heermann said. The company manufactures Mobil-Trac® System components for use in the company's paving, agriculture, defense-related, and other products.

Caterpillar is the world's leading manufacturer of construction and mining products, diesel and natural-gas engines, and industrial gas turbines.

"We chose Emporia because we liked the people, the favorable business climate, the access to major transportation, the quality of life, and because we knew we had a great base of skilled workers from which to build our employee team," Facility Manager Tami Nelson said when the plant was dedicated in April 2000. "The team approach taken by the city of Emporia, Lyon County, and the Kansas Department of Commerce and Housing reinforced our decision to locate time and time again."

During its three-year search Caterpillar looked in a number of states, and at a number of Kansas locations before settling on Lyon County and Emporia, Heermann said. "They were looking at communities of our size that had good transportation systems, access to interstate highways, adequate power and labor force, and a good quality of life," he added. "They liked a university environment, and each of the Kansas communities they were looking at had a college or university. They also wanted proximity to a technical college."

Emporia has a population of 25,500; it is located in Lyon County, which has a population of 35,000 and a labor force of 19,550. It is the home of Emporia State University, which offers bachelor's and master's degrees, as well as Ph.D.s.

"Caterpillar chose Emporia based on its criteria--site, labor and a lot of productivity," Heermann said. "For the particular needs they had, we fit the project very well."

Emporia, and Lyon County, not only were able to meet those criteria, but they could also bring other attributes to the table--those all-important incentives.

The state of Kansas has a number of incentives available to companies locating anywhere within the state, including training grants based on a formula that takes into account the number of new jobs being created and other factors. "Any business that's adding jobs, whether they're new or expanding, is eligible for state training grants," Heermann said. "The company can design its own curriculum and bring in its own employees to do the training, or it can work in conjunction with the technical or community college or other academic institution to deliver the training. Based on the state's formula, a certain amount is allocated for the training grant. The company keeps track of allowable expenses-training of instructors, housing, travel; then, receives reimbursement from the state."

The state also offers job tax credits for each new job created. In Kansas' five metropolitan areas, that tax credit is $1,500 per job. "Non-metropolitan enterprise zones-the rural areas-provide an enhanced credit for job creation," Heermann said. That enhanced credit is $2,500 per job.

"Local communities also can choose to give tax abatements to qualifying manufacturing and distribution companies that deal in interstate commerce," Heermann said, noting that such incentives are performance-based. "In Emporia, we can provide 100 percent tax abatement for 10 years on a company's building and 100 percent abatement for five years on equipment. We also own industrial land, and we have the ability to include land at a reduced price in an incentive package, which, again, is performance-based."

By "performance-based," Heermann means that the company receiving the incentive package agrees to a threshold of investment and creation of jobs over a given period of time.

"We also have a half-cent sales tax to infuse cash into infrastructure in the area," Heermann noted. "That can be for streets and roads, water, sewer or building costs. These are fixed assets that stay in the community and that can be used to recruit other companies."

Caterpillar took advantage of all incentives made available to it-- both state and local. Other companies have been drawn to eastern central Kansas as well, Heermann noted. "We have a good diversified business base."

Among the largest employers are IBP, a beef processing plant with 2,600 workers; Birch Telecom (410 workers); Dolly Madison Cake Co. (725 workers); Hopkins Manufacturing, which makes plastic components for the automotive industry (455 workers); Modine, which makes radiators for light trucks and passenger cars (400 workers); and the new Menu Foods plant, which makes private-label canned pet food (170 workers).

"Companies ultimately are trying to make a good business decision," Heermann noted. "Rural areas have more of a tendency and ability to give larger incentive packages and to more aggressively go after projects. Metropolitan areas may not be as generous."

He reiterated, "When it gets down to a short list, rural communities can be very competitive."