Solving the Jobs Riddle

Kristen Walters has a big job ahead of her.

As the chief human-resources executive for Panasonic Energy’s manufacturing plant taking shape in De Soto, she’s already running point on an effort that will ultimately employ 4,000 people operating eight production lines 24 hours a day. Roughly 500 are being onboarded now; she’s just 3,500 away from the goal that the plant expects to reach by 2027.

“There is,” she says with a flair for understatement, “a lot to do.”

The first of those lines is expected to go live in the first quarter of 2025, and Panasonic Energy officials are not alone in saying the plant will be a game-changer for regional employment: Thousands of high-end manufacturing jobs at competitive wages, from more than $20 an hour up to $35 an hour.

Perhaps the most game-changing aspect of the plant’s presence is that 80 percent of the prospective employees will require no college education or initial certification—they’ll be trained on-site with Level-5 manufacturing tech that’s rarely employed in this area.

Set against the backdrop of broader economic and manufacturing-sector trends, the Panasonic challenge is also the Kansas City challenge:

• For one, the industrial/manufacturing sector in Kansas City has been on hyperdrive for more than a decade, and shows little signs of slowing down. That will create intense competition for qualified workers, with a spillover effect as other companies will be pressured to ante up for many of those same employees. 

• The Kansas City region is already near record low levels of unemployment, which suggests that existing companies—even those outside manufacturing—will be bidding for those workers.

• The surge in home prices and mortgage rates has locked many prospective blue-collar wage earners out of the housing market—especially in the region’s most expensive residential market, Johnson County—and along with that, rents for apartment dwellers have soared to record levels.

• The job-generating multiplier for a site this large was 3:1 when Panasonic Energy opened its Gigafactory production site in Nevada in 2017. If that dynamic holds here, another 12,000 people will be required to staff Panasonic vendors and suppliers, and fill roles at supporting retail jobs.

• Transportation. In May of this year, the Kansas City Area Transportation Authority says, a little more than 1.02 million passengers rode the buses and Downtown streetcar. Even if each of those was headed to or from a full-time job five days a week, that amounts to only about 4,000 workers—roughly the same total that Panasonic will employ in De Soto. 

Work-Force Dynamics

A look at the region’s jobless figures—an indicator of where the potential labor force resides—shows that Jackson County by itself accounts for more than 42 percent of the worker potential. Getting those people to work has become increasingly difficult over the past generation, as a majority of jobs created have fallen well outside city limits.

Further complicating the task for employers are current labor-force dynamics. At the end of 2023, the nine-county unemployment rate stood at just 2.58 percent, according to the Mid-America Regional Council. That’s well below the 3-5 percent that many economists consider “full employment.” Vastly over-represented within that 2.58 percent—totaling almost 28,000 people—are high-school dropouts and others lacking the skills to qualify for meaningful employment with a livable wage.

The ATA says that, in tandem with its development arm, RideKC, it has been working with employers to develop custom, bi-state employee-transportation programs that cover more than 100 cities in a seven-county region at the core of the metro area. That task is now becoming more complicated. Officials from the ATA did not respond to requests for comment on how that work is progressing.

A Sector on Fire

The most recent U.S. industrial-market report from analytics firm Gallagher & Mohan and CommercialEdge.com showed that, as of April, Kansas City led the Midwest in logistics and manufacturing development, both by percentage of stock and by total square footage: 13.3 million square feet, equal to 4.6 percent of the region’s inventory, was under construction. That’s coming on top of the nearly 2 million square feet added in the first quarter of 2024 alone.

Additionally, this region had the Midwest’s second-lowest vacancy rate for industrial properties, just 3 percent. That’s putting pressure on sales prices; Kansas City as a region was second-highest in the Midwest, and at $91 per square foot, was even pricier than the nation’s biggest logistic hub, Chicago.

Beyond the massive data centers planned for the region—which cover lots of square footage, but don’t have the job-generating density of manufacturing—this area is primed for explosive logistics growth. 

Far and away the leading edge of that is being honed by Hunt Midwest, which broke ground last year on KCI 29 Logistics Park—a massive, 3,300-acre mega site. Company officials say it has the potential to create up to 20 million square feet of industrial space and attract more than 9,000 jobs and a powerful $2.5 billion in capital investment, thanks in large part to its direct access to the new Kansas City International Airport terminal and carriers that include FedEx, UPS, USPS, and Amazon Prime Air.

But in the near term, nothing will move the needle on regional employment the way Panasonic Energy is about to.

Allan Swan, president of Panasonic North America, said during a project status update this month that the new factory will employ Level 5 technology that qualifies it as a “smart” factory. And the production will come on a huge scale: His goal is to meet, even exceed, the production of the company’s first electric-vehicle battery plant, the Gigafactory, in Sparks, Nev.

That site cranks out 66 batteries a second, every minute of the year, he noted, and is fast closing on the 10 billion figure after seven years of operations. He’s not worried about saturating the market, either; even as global EV sales have plateaued, they’re still at record levels in North America.

Closing the $ Gap

At the higher end of its planned wage spectrum, workers at the Panasonic plant would easily top Johnson County’s per-capital income of $56,364, or about $27.10 an hour for a traditional 40-hour week over the course of the year—they would bring in close to $73,000 a year.

Without question, those are the kinds of manufacturing jobs that state officials were chasing when they pieced together $1 billion in incentives to lure the $4 billion plant to Kansas.

At the bottom end of that wage scale, however, the region’s economic fundamentals still don’t pencil out for employees. Even at $22 an hour, the $45,760 works out to $3,818 a month before taxes. With the average apartment rent of $1,312 in the county, that would mean 34.4 percent of pre-tax wages would be needed, while most financial planners recommend no more than 30 percent for that expense.

Not until workers reach $25.23 an hour, or $4,373 a month, would they get down to that 30 percent threshold.

As for buying a home? There would be no chance on a single salary. The median value of a single-family home in Johnson County, the Census bureau reports, is $343,300. Even if someone was able to secure a 5-percent-down mortgage at 6 percent (current rates for a 30-year loan are north of 7 percent), the maximum loan they would qualify for would be about $265,000.

And that gap of nearly $80,000 looks far more formidable when you consider the current average sales price of $411,000 in the county, according to Zillow.com.

Getting to Work

The housing piece, even if it doesn’t prove intractable, is only part of the broader regional challenge. 

And while Panasonic says most of the new employees will have to be trained on-site, most of them live nowhere near the plant, nearly 25 miles west of state line. Current bus service along the K-10 Connector currently provides service once every 30 minutes, with the largest buses in the system seating 40 people.

For the past 22 months, since Gov. Laura Kelly announced that Kansas had won the Panasonic sweepstakes for the plant, officials from the Area Transportation Authority, county governments, community college, school districts and others have been collaborating to solve what may be the thorniest issue emerging from such rapid employment growth on the periphery of the metro area.

The Transportation Committee working on one of the Big 5 initiatives of the Kansas City Chamber of Commerce issued a declaration of priorities near the end of 2023, but nine of the first 10 on that list involved road projects that would benefit commuters and offer little in the way of job access for urban-core workers trying to reach outlying areas. And the two priorities related to the existing streetcar system—an east-west line near 39th Street and a link over the Missouri River to North Kansas City, come with challenging price tags of $800 million and $400 million. 

In the face of numbers that big, the committee noted, somewhat optimistically, that “well-planned, connected, state-of-the-art, fully funded transportation infrastructure is imperative for the inclusive growth of the bistate region as we work to connect residents to jobs, education, and health care and connect business to work force and the marketplace.”