2019 General Assembly Industry Outlook

For nearly a generation, Ingram’s has conducted assemblies that bring together both collaborative interests and competing organizations within and across diverse business sectors. The goal has always been to identify opportunities to move the region forward. Jan. 15 produced another gathering, but this one felt … different. This time, executives from the top rungs of business and higher education brought a palpable urgency to the discussions. A 2 1/2 -hour gathering, chaired by Chancellors Mauli Agrawal of UMKC and Kimberly Beatty of Metropolitan Community College, and Michael Viazzoli, CEO of Mobank, focused on things that need to be done—now—regarding critical issues of the day. Among them: getting the KCI project back on track, aligning business and higher education programming, bolstering work-force training, and improving the overall quality of life in this region to attract and retain talent. It was a thoughtful, hope-filled discussion, and one that ended with a resounding call to action for the regional business community.

Work-Force Issues

Assembly participants laundry-listed some of the familiar attributes that make Kansas City an ideal place to live: Diversified economy, low cost of living and central location among them. But UMKC Chancellor Mauli Agrawal challenged the room to think about adding to those qualities. “Even if you’re on the right track,” he said, “if you sit on the track too long, some train will run you over.” For most in the room, work-force issues present the biggest competitive challenges and growth opportunities.

But the work force, noted Bob Regnier, CEO of Bank of Blue Valley, is an element of education, infrastructure and entrepreneurship. “They’re all interconnected,” he said, “and you have to start with K-20 education. The educational side of things is the baseline for all of us,” with the ultimate goals being business formation and promotion of entrepreneurship.

“The most pressing issue that Kansas City has right now is education,” said Jim Lawrence, a partner at the Bryan Cave Leighton Paisner law firm. Pre-kindergarten instruction in particular, is vital, and Lawrence suggests studying best practices in peer cities to assess
the scope of the challenge here. “You know, it’s not enough to be great,” he said. “We also have to keep pace with our peer cities.”

Bill Gassen, a lifelong Kansas Citian who leads the private banking arm of Mobank/BOK Financial, said the focus on education must be broad. “Whether that be our pre-K initiative that we’re working through now, through middle school and high school, and whether college is the right thing for everybody or maybe it’s a trade school,” he said. “Something like that to where we can give younger people access to the jobs, so they’re not going to Crime to try to make ends meet.”

One way to meet business work-force needs, said Agrawal, is with a larger, more relevant UMKC. That’s why he’s set a goal to increase the enrollment by 50 percent over its current undergraduate level of about 8,000 and 16,500 total students. The regional community here approximates the 2.4 million from his previous stop in San Antonio, which has a branch campus of the University of Texas that enrolls 32,000 students overall and 27,000 undergraduates.

What that implies, he said, is not just that UMKC can’t meet employer needs with just 2,000 graduates a year, but that the region overall is sending students out of market for college—too often, never to return. “So 50 percent, from 8,000 to 12,000, is still small, but we have to be reasonable—that’s going to be a steep climb, but we intend to get there.”

Randy Bredar, executive vice president at JE Dunn Construction, suggested a logical pathway to that enrollment growth and matching it to business needs. “We can really use a solid engineering program,” he said. “I know we have one, but I think there’s a real opportunity and need there.” It’s particularly relevant to this region, he said, citing an industry statistic that 70 percent of the world’s population obtains its fresh water from systems designed by local firms that include Burns & McDonnell, Black & Veatch, HNTB and others from the region.

“We are building the country with our construction, engineering and architecture firms,” declared Charles Renner, a partner in development law at Husch Blackwell. “I think the growth opportunities here are unique.”

Shonda Atwater said Metropolitan Community College was taking both long-term and short-term approaches to work-force issues, with programs such as its budding apprenticeship alliances with business. “Work-force development and business growth and formation really are intertwined,” she said.

That, said MCC Chancellor Kimberly Beatty, is why “there couldn’t be a more critically important time, frankly, to align business and education, interface, and mentor and develop programs” in both the trades and other career pathways.

Talent

Turner Construction’s Karen Hogan cited the need not just for more workers, but for a more diverse employee base. “It’s important to start really focusing on the diversity, especially into the construction industry, and getting more diverse candidates at an early age,” she said.

“One of the things we have a responsibility to do as community and business leaders in this room is to look at our recruiting processes and what can we do differently to attract diverse talent,” said Ramin Cherafat, CEO at McCownGordon Construction.

Young workers want jobs they consider more meaningful, they are more mobile and more receptive to changing jobs and cities, and aren’t as tolerant of what previous generations refer to as “paying your dues” before advancing their careers.

David Warm, executive director of the Mid-America Regional Council, drew on the heated competition last year among cities bidding to be a second headquarters for Amazon. What the company wanted, he said, aligned with interests of many young workers. “Young people are attracted to not only to the place, but where they can find similar minds in the fields that they are in, so that if something doesn’t work out in one company, they know they’ve got other options.”

That’s one thing going for Kansas City, said Shonda Atwater, because many skill sets are transferable, even in a regional economy as diverse as this one, built on agribusiness, transportation and logistics, manufacturing, health care and even, in recent years, technology.” Young people know their skills can be applied in so many ways,” she said.

Abe Cole of BKD, LLP said the regional accounting/consulting firm make roughly 80-85 percent of its new hires from the collegiate ranks. “When I was being recruited, it was all about the opportunity, right? ‘Here’s what you could accomplish.’ I think that’s evolving and changing, and now it’s all about the experience?” That, in part, is why BKD is more open about its civic and philanthropic sides these days.

Regional Assets

Fresh from a visit to see his Millennial son in Los Angeles, Husch Blackwell managing partner Jeff Simon noted the influence of ocean beaches, sunshine—and no snow. “We don’t have those physical geographic attributes of the mountains and the oceans or the beach,” he said, “So what else is he experiencing? $3,500 a month for a one-bedroom apartment, driving 45 minutes to work if you beat the traffic an hour and a half if he doesn’t, $3.79 a gallon of gas.” What Kansas City offers, Simon says, is much more in terms of overall quality of life.

That’s life in KC today, but as Michael Viazzoli noted, we’re not guaranteed 3.2 percent unemployment and solid regional GDP. “At some point in time, that will turn down,” he said. But where are the opportunities that will drive growth and hedge against those downturns? Can anything rival the recent regional advances, say, in animal health or logistics?

Mauli Agrawal sees a plum ripe for picking there: Data science. “If you look at Cerner, look at H&R Block, look at Garmin, think about what is essentially the business: They manipulate huge amounts of data,” he said. “Nobody owns that nationally just yet. And I think we have the core businesses here to where we could be bold enough to make that investment.” To that extent, UMKC is assembling a data-science institute and planning to hire faculty. “Data,” he said, “is where it is right now.”

The influence of current tech trends is impacting every organization represented a the table. Populous, said Bob White, “just hired our first full-time business-research analyst,” with more to come. And in the accounting field, Abe Cole described “a whole arms race that’s being developed among the major firms. How can we utilize those types of software platforms? How can we use artificial intelligence? This whole CPA profession is being challenged.”

“It is happening in all of our jobs,” said Owen Buckley of LANE4 Property Group. “Technology has changed so darn fast that you hesitate whether to invest in this sort of technology, because it’ll be outdated in five or 10 years.”

Mauli Agrawal cited the experience of his son working for Capital One, doing business-data analytics. The CEO came to talk with employees and asked them what line of work they were in, and the common refrain was “financial services.” Wrong, the boss told them: “We are actually in data-technology, serving the finance sector.”

Infrastructure

Those at the table were almost unanimously perturbed by reports that some members of the Kansas City Council want to re-examine last year’s designation of Edgemoor Infrastructure & Real Estateas the project lead for a redesigned KCI.

As transportation infrastructure news goes, that was particularly distressing, said Jeff Simon, considering that Missourians in November also rejected a gasoline-tax increase that would have addressed serious deficiencies in maintenance of Interstate 70. “Now we’re hearing about the airport, and if we lose the airport deal on the table now, do you think these airlines aren’t going to look somewhere else and leave us in the dust?” he said. Citing the example of Delta Airlines exodus from the Birmingham market, he sounded a rallying cry: “We’ve got to get something done. Give us the airport that we’ve been talking about. This conversation has been going on for seven or eight years.”

Steve Miller, who is also a candidate for KC’s mayor this year, said a lot was riding on what happens with KCI. “We can mess up lots of things in our city and recover from those and not tarnish our national reputation,” Miller said. “We don’t appreciate it when you’re building an international airport, but we’re operating on a national or international stage. We have an opportunity to really do something well and make a statement about who we are—and the converse is true.”

The business community, said Bob Regnier, “can continue to push the city and encourage the city as best they can. The city is the operative owner of the airport; we need to make sure they understand how incredibly important that is to the future of the city.”

Leawood mayor Peggy Dunn asked whether governance might need to be addressed to find a regional solution. “Do you think there is any possibility that the airport would become a regional authority?” she asked. “We need more ownership of the ability to have more progress.” But with KCI, she said, progress too often comes “two steps forward one step back.”

A different governance structure, said David Warm, would be a more nimble and more visionary response to managing the airport. “I think that is especially important because the future of air travel is going to begin to be changed,” with fewer mid-size city airports and other forms of transit filling in. “We have a chance to be the Midwest airport that serves a much bigger market and we have got to take advantage of it and grow that in a way that I don’t think has been possible” up to this point.

Jeff Hornsby, of UMKC’s Bloch School of Management, shared a story from November, when the school hosted 800 students from all over the country. “They flew in and it’s the first impression,” he said, and on the way out, “the last thing they see is the airport and it’s a lasting impression. Our city officials need to understand that it’s not just us locals who love the idea of driving right off, hopping on the plane and flying out, coming back and hopping in the car and leaving. It has a big commercial appeal to the city.”

Bob Regnier, who doesn’t oppose the nearly $2 billion airport project, was nonetheless cautious about making sure the region gets its infrastructure right. That especially pertains to calls for extending a light rail to KCI. “I will suggest to you that transportation 20 years from now is going to look a lot different than it does today,” he said. “So to invest in light rail all the way to the airport might not be the best use of dollars again. I don’t know.”

But David Warm said there’s no question that effective public transportation is going to be required. But it will require multiple pieces. With a streetcar system, for example, “the main purpose is to enable a different form of urban development,” he said, development that will be somewhat foreign to a spread-out metro area, considering the densities required. But that’s what will be required to dovetail with the work-force discussion earlier.

“Historically, the No. 1 mobility challenge we have in this region is getting people who live in the center of the region to expanding job centers on the edges of the region and that is not going to be fixed by light rail system,” Warm said. “It can be addressed seamlessly and affordably by a var-iety of demand-response systems and tailored flexible-routing systems.” That would include an expanded Downtown streetcar route, high-capacity bus corridors and uses of new technology to design flexible transit options.

A streetcar, said Steve Miller, while successful with its initial 2.2-mile starter line, “is not a panacea for transportation; it’s way too expensive.” But it can “form the spine of a much more comprehensive system. The challenge for our region is to figure out what do we do with a fairly limited streetcar system, where do we strategically place it, and then how do we build the connections?”

Questions of Fairness

Ken McClain, a partner at the Independence law firm Humphrey, Farrington & McClain, spoke passionately about the need for this region to push for more sharing of its economic blessings.

“One of the great unspoken issues is trying to find ways for the underprivileged, those who have been suffering from this identified economic gap between rich and poor,” he said. “Are they able to connect with services that are available in our community?” In his mind, they are not—a great many organizations are serving various needs, but too many people, he said, remain “totally unaware of what resources exist for them and the ability to create a better life for themselves and their children. There’s a real gap in understanding about what resources are available.”

The inability to connect people in those ways, said Steve Miller, is reflective of other challenges here, including a river that separates north from south, a state line, and long-standing thorns of racial and economic division. “For me,” he said, “the challenge of the next decades with all the wonderful resource here, is to get them aligned to address these chronic issues.”

Much of that can be addressed with education, but as McClain noted, many in the urban core are unaware of financial-assistance programs, even the boilerplate ones like FAFSA. “There are people,” he said, “who don’t even know the language that we’re speaking around this table.”

Perhaps the region’s greatest challenge, said Jeff Simon, lies with its ability to make opportunity equally available to all members of the community. “Not just in some parts, but very broadly. Now.”

That’s a prerequisite to growth and economic vigor, said David Warm. “We have to be inclusive of opportunity for everyone, we all will succeed only as well as the least of us succeeds.”

Defining an Identity

As it addresses the various challenges in its path, this region also must answer a fundamental question about its own identity, said Kimberly Beatty: What are we? She told of how UMB Bank’s Mariner Kemper, who is based in Denver, was asked how that city was able to reinvent itself so many times. What’s the difference between the two?

His answer: diversity of people. “Not ethnic diversity, but coming from different places, where you have different ideas and different experiences,” she said.

“So what really is our opportunity to identify our image and brand?” asked Ramin Cherafat. “Our competition is Dallas, Denver and Nashville, and they all have a brand. What is Kansas City’s identity?”

For Marc Hahn, in the health-education line, a huge opportunity exists with our status as a metropolitan area with three medical schools, “which makes us unique among cities,” he said, and serves as a potential branding point.

At the Bloch School, said Jeff Hornsby, “the need, and something that we’re working on, is enabling the entrepreneurial mind set, especially the urban core at the high-school level and junior-college level.”

Kansas City has a powerful story to tell, said MCC’s Juana Leonard, “but the story is not being told about what you do, who you are, or why someone would even want to come here and work here,” as she did a few months ago at Kimberly Beatty’s prompting. “I think we could do a better job,” Leonard said, “because there’s so much talent that we have not even identified.”

For Abe Cole, the gospel of entrepreneurship can raise the Kansas City spirit for those on the wrong side of the economic gap. “They can be part of that, and it can really bring hope to those communities,” he said. With that hope, he said, “I think we can solve a lot of those issues that we deal with.”

A Call to Action

Getting two dozen high-profile executives from across industry sectors for two hours isn’t an every-day occurrence in this region. And it provided an opportunity that those at the table said shouldn’t be wasted.

Said Michael Viazzoli, assessing the discussion points: “What we need is a sense of urgency. We have discussed a lot of these topics over and over and over again, and I don’t have a good barometer to know how much progress we’ve made in the last year, or in the last three, four or five years. “

So I would really love for us to accept that responsibility, instill that urgency in everything we’re doing, and get together in a year’s time and say we’ve done something.”

Mauli Agrawal, an automotive engineer earlier in his career, likened the challenge to building a car. “Think of a gearbox,” he said. “All of these important issues are all gears. Most communities miss the mark when they try to define the most important piece—there is no one ‘most important piece.’ All the gears have to mesh and work together.”

“I’m tired of talking about it, and many of you have heard me say this before,” said Kimberly Beatty. “At Metropolitan Community College, we have this sense of urgency and have made the investment. So I’m going to stress the urgency that we have. It is a gearbox of education, which leads to a skilled work force, which leads to socioeconomic development. And then that national reputation will come, because then they will see Kansas City is the place to be.”

What to do? Jeff Simon encouraged everyone in attendance to “raise your voice. Get your organization engaged in this conversation. Write letters, and tell the state to quit playing around with transportation funding and quit making higher education the first thing that’s cut in both states when there’s a collection crunch. Tell the city to get something done on the airport.

“We’re going to keep having this conversation,” he said, “until there’s a voice that says this is not the direction we want to go.”