From D.C. to K.C.

June 7, 2011 by

June 7, 2011

Chamber President and CEO James A. Heeter

The Chamber plays host – and advocate – this week to more than 20 staff members from our two-state congressional delegation. We call it “Spotlight Greater Kansas City” – three very full days of shining the light on key initiatives critical to our metropolitan area.

By way of explanation, most congressional offices are staffed by bright, young women and men, many of whom have rarely visited their bosses’ home districts. Spotlight is our biannual effort to provide them an intensive look at the region, our issues and our needs.

Intense is certainly an appropriate word. The schedule we’ve laid out for them would choke the proverbial horse.

In the three days they’re with us, we have sessions scheduled covering a variety of issues including biosciences, energy, engineering, sustainability, entrepreneurship, and transit. We’ll spend a morning at Black & Veatch, an afternoon at the Olathe Innovation Campus, and time both at MARC and our beautiful Board Room at Union Station.

We’ll spend several hours touring the region as well, focusing on infrastructure needs on both sides of the state line. (Federal dollars, as you know, are vital to fully-funding local transportation projects.)

We’ve provided some time for networking and a little relaxation at the end of the day, with receptions and dinners at Boulevard Brewery and the studios of sculptor Tom Corbin (the artist behind the Firefighters Memorial Fountain on 31st Street) – two very cool places to show off Kansas City.

My thanks and congratulations to our Government Relations staff for organizing yet another successful event. This is all about building relationships, and Spotlight Greater Kansas City does just that. As Brian Klippenstein, Deputy Chief of Staff for Missouri U.S. Senator Roy Blunt, tells us:

Spotlight Greater KC is truly a unique opportunity to best understand the diverse activities and meet the leadership of the Greater Kansas City area efficiently and enjoyably. Loaded with diverse on-site exposure, first hand contact with public and private sector leaders, as well as fellow staff from the area delegation, there is no better way to pack in more value in such limited time to prepare you for K.C. – area public advocacy.”

A final thought:  we regularly bemoan our bistate nature, but in this case there’s a benefit. We have not two but four U.S. Senators and a sizable two-state congressional delegation representing our regional interests. Spotlight Greater KC is your Chamber’s effort to take full advantage of that.

If you’d like to take a look at the Spotlight agenda, click here. For a list of congressional staffers attending, click here.

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Friday Miscellany – Ad Age White Paper Redefines “Rich”

June 3, 2011 by

June 3, 2011

David Albrecht, Director, International Programs & Business Research

If you’re looking for a new set of eyes with which to view consumer demographics, strap on a pair from Ad Age’s blog entry “On The Road To Riches”.

Based on research by Digitas, the post is intriguing, if only a brief summary of the full report.  Touching on the growing gap between the truly well-off and everyone else, the report packs a great deal into just one sentence:  “The study found that one’s job is both a predictor and a determinant of whether his or her household income will reach $200,000 — the minimum threshold of affluence.”

That career choices are critical to one’s lot in life is self-evident.  And a new dollar-amount threshold of what begins to approach “rich” is something that needs tweaking from time to time, as business cycles rise and fall.  But one key element in the article missing in the sentence above is the question of time – when Americans breach that threshold is even more critical, the report argues.

Key finding – families and couples with household incomes of $200,000 before the age of 35 are far and away those most likely to become truly wealthy later in life.

Twasn’t always thus.  Those over 35, with household incomes ranging from $100,000 to $199,000, were once part of a group advertisers targeted beneath the overarching concept of “mass affluence”, a phenomenon made possible by high home prices, burgeoning consumer confidence and easy credit.  With those days over, the study notes, the “aspiring” affluent consumer, about 10% of U.S. total population, now firmly self-identifies as middle class instead, and many have changed spending habits accordingly.

Click through the link above and one thing becomes very clear in the accompanying graphic, though not explicated in the text.  The number of households earning between $100,000 and $200,000 annually in  the “Emerging < 35” category  is a touch more than 18% of the “Aspiring 35+” category.

With numbers like these, if this study’s conclusions are valid – if the Age of the Snuggie®  has indeed succeeded the Age of the Plasma Television – then the future of the kind of big-ticket consumer culture that emerged in the past decade appears cloudy indeed in the decade ahead.

Flashback to FEMA

June 1, 2011 by

June 1, 2011

Pam Whiting, Vice President of Communications

Watching the coverage of the devastating Joplin tornado took me back to the several days I spent in Maryland going through FEMA disaster training.  At the time, I was press secretary for then-Mayor Emanuel Cleaver.  Sixty of us traveled to the National Fire Academy – employees and officials from the Police and Fire Departments, Public Works, Red Cross, Salvation Army, KCP&L, MAST, Water and the Neighborhood and Community Services Departments, City Manager’s Office, even Parks & Recreation (they’ve got equipment that can help in a disaster).  Our counterparts from Jackson County were also part of the group.

Our team of trainers was from Oklahoma City and had responded to the Oklahoma City bombing.  They told us they’d gone through the same training we were about to undertake – their instructors had been Kansas Citians who’d responded to the Hyatt disaster.  They said their training in Maryland had helped them better respond to the havoc wreaked by Timothy McVeigh.

They divided us into three groups – the first was comprised of what you might call the ‘frontline’ folks – the dispatchers from Police and Fire, MAST, and other agencies who’d be the first to take the calls.  I was in the second group – the ‘middle management’ types.  The third group was made up of top management from the various agencies represented.   We spent the first day in a classroom, learning and discussing preparedness procedures – and the OKC trainers shared their experiences.

The next day, the simulated training started.  We were assigned to different rooms at the academy.  I remember having a desk, computer, and telephone – and there was a television set with a “newscaster” who’d periodically come on to update what was (supposedly) happening.

As I recall, the first event was a call to dispatchers about a fire underway at a nine-story downtown apartment building.  Then reports that electricity was out on Hospital Hill…followed by an accident at 25th and Holmes with a car that had a container of toxic chemicals in it.  The dispatchers responded to all the calls as if they were real.  As one of the communications team, I started getting a flurry of calls from people clamoring for information or complaining about how they’d been inconvenienced.

Then the TV news guy came on and announced a tornado watch had been issued for the area.  I thought to myself, “Oh, man – I can see THIS coming…”

And, of course, it did.  The tornado hit the ground in Johnson County, traveled up Ward Parkway, and then headed east, roaring through an elementary school full of kids on the east side as it went.

All hell broke loose in the room in which I was working.  The dispatchers were getting calls thick and fast, and calling just as quickly for the first responders.  My phone was ringing constantly from “reporters” who wanted information.

I knew it wasn’t real, but things were moving so quickly and intensely that the adrenaline and sense of urgency kicked in anyway.  FEMA had planned well – they used real locations and the names on the other end of my phone calls were real as well.  Every detail was covered…down to the air conditioning disappearing in the building in which we were all working.

We held news conferences to keep the public informed, set up shelters, dispatched rescuers and heavy equipment, and tried to keep up with the (simulated) tragedies that were unfolding.

By the end of the day, we were all exhausted.

The next day, we focused on the ‘recovery’ stage of a disaster – all the things that need doing once the stuff has stopped hitting the fan.  It was intense.

I came away from those four days in Maryland with a new appreciation for what it takes to respond to and recover from catastrophic disaster, a new appreciation for the multitude of people and organizations involved, and a new understanding of all that’s required in response and recovery.

As I recall, the FEMA course prompted changes and improvement in the city’s emergency response plan when we got back.

My experience was “just pretend” but underscored the importance of training, why firefighters and cops and hospital workers drill, drill, drill, till the responses come almost automatically.  The kind of response that kicked in for the St. John’s hospital workers who had just five minutes warning before the twister hit Joplin.

It also underscored the importance of good planning and collaboration.

So while I’ve been praying for the victims of last week’s tornado, I’ve also been praying for those responsible for dealing with it, from the mayor on down.

I cannot imagine the enormity of their task, nor their heartbreak.

The Export Imperative And Where We Stand

May 27, 2011 by

May 27, 2011

David Albrecht, Director, International Programs & Business Research

The Chamber’s 2011 Economic Update was highlighted by Emilia Istrate’s keynote, based on a Brookings Institution report entitled “Export Nation”.  For lack of a better name, I’ve named her her call to arms the “export imperative”.

The United States still exports more goods and services than any other country in the world, despite ferocious competition from developing giants like China and established rivals like the EU.  But to retain our economic strength and substantially increase the speed of recovery, we need to be doing much more as a nation to sell what we make and know to the rest of the planet.

If you take only one simple stat away from this post – or Ms. Istrate’s presentation – let it be this:  doubling American exports would create two million jobs – about a quarter of all those lost since the onset of the Great Recession.

So, where do we start?  What rests at the center of our collective export sector?  The answer is simple – cities; major metropolitan areas like ours with the people, knowledge, institutions and infrastructure needed to make things happen globally.

American cities are the export engines of their states:  Detroit – 48% of all Michigan exports; Baltimore – 51% of all Maryland exports; Denver – 55% of all Colorado exports;  Seattle – 72% of all Washington exports.  What about us?  The Missouri side of the metro cranked out 17% of all Missouri exports, the Kansas metro area rang up 28% of Kansas exports and collectively, we were responsible for 29% of the total of both states’ exports (all percentages 2009).

Fine and dandy as far as lists of figures go.  But where do we stand now in exports, and how do we rank compared with other metros as a welcome but still sluggish recovery continues?  First things first.  2008’s numbers rank Kansas City as 29th in population but only 33rd among major cities for exports as a percentage of the regional economy – not outstanding, but not downright terrible either.

The other portion of our Update, though, was somewhat less encouraging.  Frank Lenk’s report drew on more recent data to compare Kansas City to peer metros.  Though Frank used only one statistical measure – employment growth – it was an eye-opening citation.  City after city, from Denver to  Salt Lake City and from Omaha to Austin, have outdistanced Kansas City in job creation from the beginning of the recession through the beginning of this year.  Kansas City also lags behind US job creation for the same period.

To pull an unusually blunt bullet from Frank’s slideshow, “Whatever economic strategy we’ve been following isn’t working well enough to keep up.”

But a concerted, metro-wide effort to promote and encourage regional exports could be  a very big part of a long-term, sustainable solution.  Just such an effort is already under way in Los Angeles, a sprawling metro area with a political and economic landscape far more complex and fractured than we could imagine.  And if LA can pull together to expand its exports, there’s absolutely no reason the Kansas City civic and business communities can’t do the same.

Tragedy in Joplin

May 24, 2011 by

May 24, 2011

Chamber President and CEO James A. Heeter

The wrenching coverage of the Joplin tornado disaster was especially personal for me – I was born not far from there and still have family and friends in the area.  As so many are doing, I pray for those whose lives have been lost or shattered.

The response we’ve seen from Kansas City reinforces what we already knew about our community – our citizenry is both compassionate and generous.  We’ve posted a list of ways you can help…and we hope you will. 

There are three stages in any disaster:

  • Preparation – the kind of training exhibited, for example, by the staff at Joplin’s St. John’s  Medical Center, who quickly moved their patients into the hallways and away from broken glass.
  • Search & rescue – the heartbreaking, occasionally joyful, efforts we’re seeing now, as first responders work through rain and hail and lightning to – hopefully – find survivors.
  • Recovery – the third phase and often the most difficult.  As the story moves off the front pages, the citizens of Joplin will try to put the pieces back together again.

Right now, Joplin is still in stage 2 – search and rescue.  As the city enters the recovery phase, the community will still need our help.  We’re staying in close touch with the Joplin Chamber and other Missouri Chambers to see what we can do once the television cameras and reporters move on to the next story.

We’ll keep you posted.

Bring Your Ideas to the Conversation

May 17, 2011 by

May 17, 2011

Chamber President and CEO James A. Heeter

The “Big 5” ideas we’re getting from around the community are simply great. Chamber Chair Greg Graves (Burns & McDonnell) and I are asking this question: If you were CEO of Greater Kansas City, what would be your five big, attainable, and specific goals be?

As Greg is fond of saying, “My company has goals. Your company has goals. What are the goals for ‘Big KC’?” 

We know that our region is unique, with more governmental jurisdictions per capita than most. We’re asking people to erase those lines on the map in their heads, and think about what we might accomplish if we worked on something together. 

The general public – on both sides of the state line – looks to business first for solutions to the challenges facing us.  That was the finding of the bistate voters’ survey The Chamber conducted for its 2010 Governors’ Summit.  That same survey found that voters in both Missouri and Kansas believe the lack of bistate political leadership and cooperation is holding the area back. 

That’s the impetus behind The Chamber’s Big 5 initiative.  As the region’s Chamber  – and in the absence of any overarching political leadership – The Chamber is playing a role few can.  We’re collecting ideas from individuals and various constituencies and, once the Big 5 are determined, will serve as the convener of those willing to commit to each of the goals.

The state line may cause us problems elsewhere, but how can we work together above the state line to move our region forward and improve our quality of life. 

I encourage you to see what other people are saying and to add your own ideas. If there’s an idea you agree with, feel free to expand on it. Remember, we’re looking for thoughts both specific and tangible…so have at it!

Thanks!

The 2011 Economic Update: A Dark Surprise, A Robust 2012

May 13, 2011 by

May 13, 2011

David Albrecht, Director, International Programs & Business Research

The Chamber’s 2011 Economic Update is out as of this morning, and as in all economic forecasts, there’s plenty to chew on, applaud or disagree with.

A key finding is that the region’s unemployment hole was far deeper than first thought.  MARC had estimated metro job losses at 61,000 from peak to trough – that is, from the fourth quarter of 2007 to the first quarter of 2010.  The estimate now, after revisions in federal workforce data, is half again as bad – 93,000 total jobs lost metro-wide.  Significantly, these are not only hourly and salaried employees, but proprietors as well, as the Great Recession and its aftershocks took down small businesses while decimating workforces in larger firms.

In addition, while 2008 may have been the first stomach-levitating drop at the top of the roller coaster, and 2009 the screaming descent, what stands out was the unpleasantness of the bottom of the slope.  2010 was a flat-out lousy year for the area’s economy.  While GMP (Gross Metropolitan Product) rose by 1.7% between Q4 2009 and Q4 2010, the U.S. economy as a whole grew 1.1% faster, with local job creation lagging even our sluggish GMP growth.  Between Q4 2009 and Q4 2010, the forecast estimates that 700 net jobs were created metro-wide.  In fairness, I should mention that from the actual bottom of the recession early in 2010 to the same Q4, the Kansas City MSA did add about 3,400 new jobs in all – better than the stat above might lead you to believe, but only about 10% of projected new jobs for 2012.

As in years past, the forecast splits the next two years into two possible outcomes – baseline and slow-growth.  The latter rests on an assumption you’ll know all too well if you’ve had occasion to buy groceries or fill up the car recently – continuing political turmoil in the Middle and resulting high energy prices through the end of 2011.  The Producer Price Index out on May 12th did show prices for finished goods up 0.8% during April, as fuel prices accounted for much of the month’s substantial increase in retail spending – not what America’s retail sector had in mind.

The good news, though is out there, and it’s substantial.  Labor force totals from BLS show an additional 10,000 jobs added during February and March metrowide, and these totals are consistent with recovery trends seen in the past ten years.  Better yet, the forecast calls for expansion in the metro economy at a 3.8% rate by the end of 2011, with regional expansion outstripping even national GDP growth during 2012.  Job projections are positive as well, with 22,000 jobs created in 2011 and 32,000 in 2012.  Energy costs will remain the biggest of several wild cards.

If’ you’d like to download your own free copy of the Economic Update (if you’re a Chamber Member, that is), then head on over to the Chamber Store on our website.

Hey KC—–Give Me Your Big 5

May 9, 2011 by

Greg Graves, Chairman and CEO of Burns & McDonnell, and The Chamber's 2011 Chairman

Hey Kansas City, I need your help.  I look around town.  I have goals, you have goals.  Cities, counties, companies, and even charitable organizations have goals.  But, KC, BIG KC, Regional KC, doesn’t have any goals….things WE are trying to achieve.  With the possible exception of the Royals going .500 or the Chiefs winning a playoff game, I can’t think of enough things that WE want to get done.

This year, the Greater Kansas City Chamber is going to set our Big 5.  Five things that we would like to see Regional Kansas City get done in the next 3-5 years.  They won’t be general, life style outcomes goals like crime, unemployment, etc., but will be tangible ‘things’ that would make Kansas City a better place to live, play, work, grow a business, and raise a family.

Here’s where you come in.  Jim Heeter (Chamber President and CEO) and I want to know what your ‘thing’ is or, better yet, your Big 5.

Let me give you a terrific example:  The Arts Council of Metropolitan Kansas City, led by Harlan Brownlee, is already working on a great concept for an annual 16-day regional arts festival they’re calling ArtCopia.  Their idea or variations of it have been coming up non-stop in The Chamber ‘no bad ideas’ meetings as something we should get behind.  ArtCopia is, in my opinion, a perfect example of what we’re talking about—-A Big Regional Idea but not yet A Big Thing.  

Your “thing’ doesn’t have to be new but it has to be big.

Ideas don’t have to be Chamber led.  My best guess is that 2 of the Big 5 will become new Chamber initiatives and the other 3 will be Big Things that the Chamber will help make a success to the extent and to the ability we can and organizers want.

I mentioned above our ‘No Bad Ideas’ meetings.  We’re planning 21 of them with about 250 participants.  We’ve had 10 as of today and they have been incredibly diverse, not to mention fun.  One day two weeks ago, we met with some of Johnson and Wyandotte Counties’ most important leaders, including the Mayors of Leawood, Shawnee, Mission, Overland Park, Olathe, and Kansas City, KS.  We were also joined by new Johnson County Chair Ed Eilert.  The very next day we met with a group of central city leaders chaired by Urban League CEO Gwen Grant to discuss Big Thing Ideas for disenfranchised areas of the urban core.  The meetings were different but were both full of energy AND ideas.

OK KC, back to where you come in.  We want your ‘thing’ or ‘things.’  And we have lots of options for you.  1.  Go to the Chamber Website.  Find the “5” right there on the front page and give us your thoughts.  2.  Write Jim or me personally.  3.  Write a Letter to the Editor or finally,  4.  Call us live on 980 KMBZ next Wednesday, May 4. 

Start with this:  Hey Jim and Greg, what I’d like see our Regional City get done in the next 3-5 years IS _______.   My only request:  Be Specific.

I love this town.  Give it ambitions.  Help me.

(This guest editorial was originally published in The Kansas City Business Journal, April 29, 2011.)

Bruised Commodities And The Expectations Game

May 6, 2011 by

That loud “crunch!” sound you heard on Thursday was the sound of falling commodity indices.  For trading ending May 5th, a wide range of commodity prices tumbled, with declines ranging from “not too bad” to “that’ll leave a mark.”

Gold, which hit a YTD high of $1551 on May 3rd, fell as low as $1462, WTI oil dropped below $100 for the first time since Saint Patrick’s Day and silver collapsed by 30.3% from its nominal 31-year high on April 25th.

Whence Thursday’s full-on whacking?  Well, it’s complicated . . . not to mention volatile.

For starters,the European Central Bank left interest rates unchanged at 1.25%, kick-starting a faltering US dollar.  First-time unemployment claims came in much higher than expected, at 474,000 and ADP projected a meager 179,000 new private-sector jobs in April.  Then the DOE reported the biggest oil stockpiles since October.  This prospect – a slow-moving recovery in which Americans cut spending on energy (and by implication cut spending on travel, discretionary spending and more) – was enough to spook energy traders, just as the CME Group imposed new margin restrictions on what had been a white-hot silver market.

That was Thursday and even Friday’s surprisingly strong jobs report wasn’t enough to stop the fibrillation.  After brief rallies, oil closed under $100, and silver lost another couple of bucks as stocks rose.

The unpleasant truth, at least for silver, is that the kind of unusual price spike we’ve seen over the last few months is just that – unusual.  In fact, it’s extremely unusual.  Plotting out nominal silver prices from January 1975 to May, 2011 reveals two – and only two -superspikes in silver prices – during the winter of 1979-80 as the Soviets invaded Afghanistan and the current frenzy.  And this sketch doesn’t even try to adjust today’s prices for inflation.

Gold’s recent history is a bit different.  The same date range produces a similar story at the end of the 1970s.  But the spike-and-collapse track wasn’t comparable.  Silver may have fallen to 1/10th of its peak price, but gold fell only to about half of its peak, and then swung gently to and fro in the $300-$500 range for more than twenty years.   Only in the mid-2000s did the big climb begin, and even then it contained plenty of volatile fizz.

What were the expectations of those who rushed into precious metals over the course of the past six months?  A knee-jerk response might be “a quick buck”, judging by the number of full-page newspaper spreads, online ads and radio spots flogging the value of gold and silver as investments.

Naturally, there’s more to it than that.  As a hedge against inflation, precious metals can and do make sense.  And despite the most authoritative of pronouncements, inflation – from the gas pump to the dairy aisle – is very real.  But as the past 35 years show, at least for individual investors there have really been only two strategies – buy and hold for a very long time in the case of gold, or hang on for the ride of your life after waiting even longer in the case of silver.

IMF – Enter The Dragon . . . Or Not

April 29, 2011 by

With little fanfare, the International Monetary Fund just released one of the most interesting projections in its history – a study predicting that by 2016, China’s GDP will surpass that of the United States.

Uh . . .

So, how did the IMF arrive at this conclusion, when nearly all prior projections from soothsayers far and wide pegged the transition somewhere in the distant, misty mountains of 2030-2050?

For starters (econo-speak warning!), the measurement IMF analysts used is a bit different.  Rather than conventional GDP totals and nominal currency values, they used Purchasing Power Parity  – AKA the Big Mac Index.  Burger chain prices should be roughly the same from nation to nation, so PPP gives economists  a way to see just what kind of clout a wallet full of RMB (or yen or rand) gives a shopper in another country.  It also lets them end-run the problems of dealing with artificially low currency values – as is the case in China.

Reactions to the report have varied.  Some (mostly politicians) have used the report to call for everything from further spending cuts to “cracking down” on China’s monetary policy.  Others (mostly economists) note that it’s one study using one  method to assess one nation.  Others note that things just aren’t that simple, and that while the trend can be your friend, “at current growth rates” are four of the most dangerous words in English.

Its only natural to be swept away by the awesome velocity of China’s transition.  It’s the most fascinating economic story on earth.  But forecasting is fraught with danger, as any journalist who 20 years ago predicted the Japanese Century can attest.

Even casual Asia-watchers know that there’s much more than meets the eye in China.  For starters, what is one to make of China’s ghost cities – enormous malls and whole cities designed for hundreds of thousands of residents, inhabited only by custodians and security guards?  What of inflation’s effects on the hundreds of millions of inland Chinese excluded from the coastal boom, as food prices rose by 11.4% in March alone?  Transportation gridlock, particularly in coal shipments, is an emerging problem as well.

No one can deny that the unleashed energy and dynamism of more than a billion people has forever changed China in less than a generation, or that its astounding growth seems immutable.  But we’d also do well to remember that the challenges China faces are just as real as the ones we face here at home.  However helpful it is to keep an eye on the trajectory of events, trajectory is not destiny.