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Regional Report: The Plains States Leverage Their Synergies

Growth and collaboration mark the economic development picture in the Plains States, which have joined forces to compete against other more populous regions.

Q1 2020
The 443-acre Logistics Park Kansas City in Edgerton, Kansas,offers a combination of domestic intermodal service, international intermodal service, and direct-rail/carload service.
The 443-acre Logistics Park Kansas City in Edgerton, Kansas,offers a combination of domestic intermodal service, international intermodal service, and direct-rail/carload service.
In the upper Plains States of Kansas, Nebraska, North Dakota, and South Dakota, shared economic goals are leading to increased opportunity for collaboration within the region. James Leiman, director of the Economic Development and Finance division for North Dakota, says the states of the upper Plains share myriad commonalities.

“There are some concurrent economic sectors that benefit us all, whether it’s agriculture, energy or technology, but what’s really critical is leveraging those synergies to make us all stronger,” Leiman says.

Leiman further notes that growing collaboration among neighboring states in the region stems in part from the need to ensure the region can compete against other, more populous regions. By strengthening the whole, Leiman says the individual states will benefit.

“It’s not so much that we’re competing against our neighboring states,” says Leiman. “We find that collectively we’re actually competing for capital and for skill sets and workforce from more or less the West and East coasts. So there’s a healthy competitive environment, but we’re working together as a team versus what you might see in some other parts of the country.”

Economic Growth
Positive economic momentum has been in evidence in the Plains States in recent years. For instance, Steve Westra, commissioner of the South Dakota Governor’s Office of Economic Development, says his state’s business sector has grown 136.6 percent since 2000. Meanwhile, North Dakota’s population exploded by a U.S.-high 15.7 percent between 2007 and 2017, driven by the state’s energy sector.

In Nebraska, increases in agriculture and food manufacturing have helped boost the state’s exports by 274 percent since 1999, outpacing the growth not only in its neighboring states but of the average in the U.S. Kansas has seen 11 percent annual growth in corporate headquarters jobs since 2013.

Plains economic development professionals say businesses enjoy a low-tax, low-regulatory environment in their states, as well as more direct access to decision-makers, including local and state leaders. “It’s reasonable to do business in this region,” Westra explains. “Comparatively speaking, doing business somewhere like Illinois, California, or New York is expensive and requires a lot of red tape.”

The Plains States also enjoy a low cost of living, according to Kansas Secretary of Commerce David Toland and other economic development reps, particularly when compared to more densely populated states. Leiman says the legacy costs of developing a new operation or expanding in more populated states tend to be much higher than in the Plains States.

“You’ll find that corporate taxes, property taxes, things like that are drastically higher as a result of those legacy expenses, and higher costs in general have driven some companies to want to look in other places,” says Leiman.

Plains States also boast of their workforce’s work ethic and educational attainment levels. Toland says Kansas has the 11th-highest percentage of residents with college degrees in the country: “We’ve really worked as a state to make sure that this educated talent is aligned with the needs of employers, and that’s been a key part of our growth.”

Primary Industries
The Plains States can point to a range of industries with notable presences within their borders, including energy, agriculture, and technology. Historically, agriculture has been a core source of business in the region, and it continues to be today. For example, agriculture serves as a crucial piece of South Dakota’s economy not only because of the state’s landscape, but also because of the generations that have made their living that way.

“Early settlers in our region made a living farming and ranching, and that still proves to be true today,” Westra says. “Agriculture, of course, looks a little different today than it did 100, 50 even 20 years ago. But our producers take pride in knowing they play a role in feeding the world.”

Similarly, Toland says, “Agriculture is central to who we are as Kansans.” Agriculture doesn’t just mean farms — it also means many ag-related businesses, such as food processing, equipment manufacturing, and the production of biofuels. “Ag is very much in our DNA, and we’ve worked to press our advantage in that sector,” Toland notes.

Location, Location, Location
Plains States’ economic development officials also point to their location in the middle of the country as a critical advantage.

“One of our greatest strengths as a region is our location — we’re ideally located between each coast, and South Dakota, in particular, has two interstates that stretch east and west, and north and south, intersecting in our largest city, Sioux Falls,” Westra says.

Plains economic development leaders believe their region does not have the reputation yet that it deserves. Toland agrees that “geography matters,” particularly when the transportation infrastructure exists to provide necessary supply chain services. For instance, he notes that the 443-acre Logistics Park Kansas City Intermodal Facility, which is located in Edgerton, Kansas, is the only full-service facility in the western two-thirds of the U.S. offering a combination of domestic intermodal service, international intermodal service, and direct-rail/carload service.

“For businesses that serve both regional and national markets, our location and infrastructure is a key advantage to being in Kansas,” Toland says.

Facing Challenges
Despite all their successes, key industries in the Plains States face an array of challenges ahead. Farming subsidies have been crucial to supporting the agricultural industry, and agriculture exports depend on productive international trade relationships, meaning any continuation of recent trade wars could be damaging. In addition, the previous oil and gas boom seen in states such as North Dakota appears to have slowed and stabilized.

Dr. Nancy Hodur, director of the Center for Social Research at North Dakota State University, says she expects the number of active wells that open in North Dakota to stay level rather than grow, while the Kansas City Federal Reserve district that includes Kansas and Nebraska released research indicating that energy activity in the district dropped sharply in 2019 and expectations for future opportunity have declined.

Additionally, Westra and others point to a general lack of awareness of their region as a prime economic development challenge. “People simply don’t think or know about South Dakota, and the region in general, as a viable option for business investment,” he says. “In the last few years, and going forward, it’s been our mission to get South Dakota’s name and story out there for anyone and everyone who will listen.”

Plains economic development leaders believe their region does not have the reputation yet that it deserves – too often the area is not viewed as a fertile land for business investment. In particular, Leiman says North Dakota and other states in the region have a sizable tech presence and developing bioresearch and bio-manufacturing sectors, but “these are things we’re not very well known for, but they exist.”

“The second-largest Microsoft campus, for example, in the United States is here in Fargo, North Dakota,” says Leiman. “These are things that people don’t really consider, but they’re here and they’re growing. And it’s regional.”

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