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Inward Investment Guides

Regional Report: Energy Sector Bringing Jobs and Wealth to Plains States

Winners of numerous accolades, the Plains States are garnering investment across diverse industry sectors and growing their economies.

Steve Stackhouse-Kaelble (Directory 2014)
The Plains States are far healthier than the nation as a whole in terms of unemployment. Meanwhile, state governments — eager to boost their reputations as “business-friendly” — continue to tweak tax and economic-development policies. Leading the way is North Dakota, which had the highest 2012 growth in gross domestic product of any state, at 13.4 percent, according to the U.S. Bureau of Economic Analysis. It was the third consecutive year North Dakota topped the GDP list.

The Energy Boom
Hydraulic-fracturing technology is giving energy companies access to vast opportunities in the Bakken and Three Forks reserve areas of North Dakota, where the U.S. Geological Survey estimates more than seven billion barrels of oil and 6.7 trillion cubic feet of natural gas are waiting to be extracted from the ground. In fact, North Dakota has grown to become the country’s second-largest oil producer, behind Texas. According to the state’s Department of Mineral Resources, there were 9,322 wells in production in July, the highest count ever, and the state set records in oil and natural gas production.

The boom is fueling dramatic job growth. North Dakota’s 2012 employment and population growth led the nation, and its 2.7 percent jobless rate in October 2013 was the lowest of any state. MoneyRates.com recently called North Dakota the best state for young adults with regard to economic opportunity, noting that the state has a higher proportion of 18- to 24-year-olds than any other state.

Of course, it’s impossible to experience that kind of boom without having the good news spill over into other sectors, such as transportation and warehousing, wholesale trade, and construction. With all the oil that needs to get to other places, producers have increasingly turned to rail transportation because pipelines can’t handle the demand, and that is driving talk of new pipeline development.

Healthy Job Growth
Manufacturing growth is always welcome in any state, and the Plains States are enjoying plenty of new jobs. In Kansas, for example, another hundred people will be making margarine at Unilever’s spreads facility in Johnson County; and Crosswinds Petfoods will be adding more than 60 jobs in Topeka. In South Dakota, expansion at equipment maker MDS Manufacturing Co. is among the success stories. Japanese manufacturer Morio Denki is heading to Lincoln, Nebraska, with its first U.S. operation. North Dakota may be leading the nation in job growth and lack of unemployment, but its Plains neighbors are not far behind.

The nation’s second-best jobless rate in October 2013 was in South Dakota, at 3.7 percent, and Nebraska followed with a rate of 3.9 percent. The Kansas rate of 5.6 percent tied for 13th best and was well ahead of the national rate, too. GDP growth in the other Plains States has also been healthy — the 2012 growth rate reported by the BEA was 1.5 percent in Nebraska, 1.4 percent in Kansas, and 0.2 percent in South Dakota.

New Initiatives

Though the headlines have been positive, state leaders across the Plains are not content to just let good things happen on their own. They’ve been actively trying to build upon their already good credentials, with new initiatives for businesses and individuals.

In South Dakota, for example, four new economic development programs came online in July, as part of the “Building South Dakota” legislation passed earlier in 2013. The programs include new support for local communities and economic-development organizations that are working to grow industry, along with initiatives rewarding equipment upgrades and job growth.

Nebraska, meanwhile, aims to harvest not just wind and wheat but innovation — one example is the Nebraska Innovation Fund Prototyping Program, which recently supported efforts by Norland International to develop a state-of-the-art bottling system. Meanwhile, a new tax law in Kansas is striving to grow private-sector jobs, lowering taxes for businesses and individuals alike. Taxpayers at all income levels saw their rates decrease, and small businesses were freed from paying taxes on non-wage business income. Another initiative, the Rural Opportunity Zones program, eliminates income taxes for up to five years for people who move into one of the designated counties, and pays up to $15,000 in student loan costs for these new residents.

Numerous Accolades

Organizations that gauge competitiveness and economic results are noticing these kinds of efforts and the growth they support. For example, 24/7 Wall St. recently named North Dakota the best-run state for the second consecutive year, and Nebraska was ranked third. CNBC put South Dakota at the top of the list in ranking “America’s Top States for Business 2013.” South Dakota, North Dakota, Kansas, and Nebraska all were among the top 10 pro-business states rated by Pollina Corporate Real Estate. And Kansas was one of the Gold Shovel recipients in Area Development’s 2013 Gold and Silver Shovel Awards, tallying $2.3 billion in capital investment in 2012.
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