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Kansas Report: Diverse Economy Key to Stability

Feb/Mar 09
Kansas is more than just an agricultural state - its economy includes high-tech sectors such as advanced manufacturing, aviation, transportation, utilities, and energy. Even though significant layoffs have occurred in manufacturing and aviation - most notably Hawker Beechcraft and Cessna - the recession hasn't hit with the fury it has elsewhere in the country.

For three straight months, from July to September 2008, the Kansas Business Conditions Index of leading economic indicators advanced, due largely to the strength of the core industries of agriculture and alternative energy. According to Creighton University's October 2008 Kansas Economy Report, weakness in the telecommunications and food-processing sectors was offset by increased sales of transportation equipment and energy production.

"Overall, 2008 was a good year," says Eddie Estes, president of the Western Kansas Manufacturers Association. "A lot of our manufacturing is agricultural equipment, which held up fairly well. Livestock equipment and beef processing have also been strong."

Ernie P. Goss, Ph.D., professor of economics at Creighton University, says the state has lost fewer than 1,000 jobs since last October. However, he expects that "a weakening transportation equipment-manufacturing sector and lethargic farm income will push the state's unemployment rate above 5.2 percent (seasonally adjusted) in the first quarter of 2009." He says that the state could have a $1 billion shortfall by the 2010 fiscal year. "

Logistics a Driving Force
Even though manufacturing and shipping are down, companies still recognize the advantages Kansas offers to logistics, warehousing, and distribution. With a strategic location, strong highway system, and four Class-I rail carriers, Kansas provides next-day freight delivery to nearly 70 percent of the American population. Among recent projects:

• In Gardner, near Kansas City, Burlington Northern Santa Fe (BNSF) is building a new state-of-the-art rail intermodal facility that will enhance logistics throughout the state.

• Coleman Company, a manufacturer of outdoor recreation gear, recently announced it will build a $43 million, 1.1 million-square-foot distribution facility in Gardner to take advantage of the new BNSF facility; more than 100 jobs are expected by later this year.

• Package Development Corporation, a manufacturer and distributor of products for the food industry, is relocating its operations to Kansas City to also take advantage of the distribution infrastructure, committing more than $1 million to new capital investment and creating 20 new jobs.

Banking on Biosciences
Kansas has a fast-growing bioscience and animal health cluster that continues to attract top biomedical research projects. Kansas State University in Manhattan has landed the federal government's $650 million National Bio and Agro-Defense Facility (NBAF), a laboratory that will develop ways to protect the American food supply from bioterrorism. Goals include developing vaccines and countermeasures for diseases that threaten livestock and other animals. The center, which will employ up to 350 scientific personnel, is expected to have a $3.5 billion economic impact on the state over the first 20 years of operations.

"There really is no overstating the size and scope of the NBAF project," says Secretary of Commerce David Kerr. "While Kansas was already an acknowledged leader in the biosciences, the decision to locate NBAF here confirms our status and ensures a new generation of biotech-related growth and development in our state." He says 13 states were in the running for the project.

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