The Hutchinson / Reno County Chamber of Commerce’s board of directors identified a half-dozen priorities this year, trying to revitalize a local economy that's been struggling for decades.
A pair of studies the chamber contracted to aid in the effort is nearing release, and a new group has formed that will focus primarily on entrepreneurship, said Chamber President Debra Teufel.
While Teufel and the plan have the full support of the Chamber board, at least one local leadership consultant believes Hutchinson needs “a paradigm shift” -- a more collaborative community-wide effort and a sharper focus on a few key areas that will achieve more significant results.
The six areas the chamber will focus on, Teufel said, are:Business expansion and recruitment Workforce development The local regulatory environment. Retail development Housing Entrepreneurship
Challenges in recruiting
While 2018 is off to a good start for business recruitment, with the chamber responding to some early year prospects, “things have been really flat since 2016," Teufel said.
“There can be a lot of reasons for that,” she said. “It was an election year, and there’s more uncertainty about the future sometimes in an election year, so projects are put on hold.”
A significant part of the difficulty the past two years, however, Teufel believes, were cuts to staff at the Kansas Department of Commerce and a focus by the remaining employees on the Kansas City metro area.
Last fiscal year, data from a Kansas Department of Commerce annual report shows, just three of the state’s successful business recruitment projects – accounting for 7 percent of the total – were outside of the Kansas City metro area.
While those three projects – in Scandia, north of Concordia, along with Wichita and Manhattan – represented 10 percent of total business investment, they accounted for just 0.25 percent of the new jobs.
“The Department of Commerce is the front line where projects come in,” Teufel said. “If a national firm is looking at this region of the country, if they want to be on the I-35 corridor and within so many miles of their customers or suppliers, if they want a building or site of a certain size, it starts with the Department of Commerce. They do the legwork and reach out to us.”
Fortunately, Reno County is also a member of the Greater Wichita Partnership and the Regional Economic Area Partnership: two agencies focused on regional development.
“Greater Wichita sees dozens more projects than we do, but if they fit criteria for Reno County, we get to submit a proposal,” she said.
The chamber also launched a new site last fall with Zoom Prospectors, a real estate website allowing anyone to search its online database for commercial and industrial buildings on the market in Hutchinson.
“Having a vacant building is a blessing and curse,” Teufel said. “We don’t want it to sit idle, but if we have a building like Eaton, it gets looks more often … In December we had two site visits, two looks at Eaton and another building in the community not on the market but which could be.”
The 'pull factor'
What’s happening in the retail sector, resulting in many store closures, Teufel said, is also a symptom of what’s happening with job creation – changes in markets at the national level, many due to technological advances.
“They’re suffering because the purchasing trend is more online,” she said. “Retailers are fighting an upstream battle. The closure of Target is a symptom of national trends as well as local output.”
Economists often use a measure called “pull factor” to discern how much of local retail sales are from residents and how much from outside, and whether sales are lost to neighboring counties.
In its latest assessment Reno County has pull factor of 0.99, Teufel noted, meaning slightly more retail business is leaving the community than is coming in.
“We’re holding our own if you look at us compared to some neighbors,” she said. “We’re in line with McPherson, and we beat Stafford, Rice, and Kingman counties. Our leakage is into Sedgwick and McPherson counties.”
Next is learning what types of retail sales are going to neighboring counties – and now the internet. From that, recruiters can determine demand for products or services to help convince those providers to bring a business into the county.
“We see those as market opportunities,” Teufel said.
One of the recent chamber studies is a market assessment to target specific retailers or retail categories, to convince them there are markets for them in Hutchinson and Reno County.
Vehicle sales, clothing, general merchandise and drinking establishments have some most significant leakage – and potential opportunities for new business – in Reno County, the study shows.
There’s also room, though much less, for more specialty grocery stores, shoe stores, and even restaurants.
Drinking establishments serving alcohol have one of the largest leakage factors, although they also have some of the smallest retail sales. The study says there is enough demand for more than 150 percent growth.
“We had anecdotes from young professionals who wish there were more vibrant opportunities for young professionals in their 20s and 30s to go after hours,” Teufel said. “These numbers prove we have less than we should have in market share for that segment.”
Is there demand?
“It’s kind of the chicken or the egg,” Teufel said. “We have a lot of leakage going to buy those things, but will a retailer come in if they don’t feel the demand, if we don’t have that leakage?”
The retail clothing gap is worth more than $13 million a year, Teufel noted.
“Companies don’t make decisions in wishes,” she said. “It’s based on fact, which is why we have to have the facts.”
The gap for general merchandise stores was nearly $32 million and accounted for the largest leakage, behind autos.
The study was done before Target closed, however, which raises other questions.
The manager of Hutchinson’s Target store, Diana Sack, said the business was profitable, just not as profitable as other Target stores in the region.
“There are definite differences,” said Sack, who has also managed stores in Garden City and Wichita. “What’s nice about Hutch is we know our guests. There are a lot of regulars. What we don’t have is a lot of people coming in. It’s not near as busy as any of our Wichita stores.”
She also noted when exploring comparative data that all the other Target stores have big spikes in sales on weekends -- but not in Hutchinson.
“Saturday was our biggest day, followed by Friday and Sunday behind that,” she said. “But it’s fairly flat overall. Especially if you looked at this year over 10 years ago, there’s been a significant decline. This county is really struggling.”
Aiming at the targets
Besides potential demand in dollars, the study explores the types of people that live in a community, called psychographic trade areas. The study combines that with local demographics to suggest specific brands stores to meet those groups.
For example, under clothing, the study lists nearly three dozen store brands the Chamber may wish to recruit, from Abercrombie & Fitch to White House/Black Market.
“If you look at TGI Fridays, that’s a brand we see represented in clusters where there are lots of tourists,” Teufel said. “We consider Hutchinson a destination tourist economy as well. We have unique and different attractions. But would a TGI Fridays or a Pei Wei come here? We have to think like them and stress points for them, why they should come here. At the end of the day, it’s all about market-based decisions.”
Initially, Teufel said, the Chamber will select 10 businesses to pitch.
“I understand retail across the nation is changing with online,” said Chamber Board President Brad Pryor. “But people still like to try on shoes in the store or to try on clothes. There’s still a market. We just have to take it to the next level and recruit people in. That’s what we’ve lacked in the past. We haven’t executed.”
“(Teufel’s) attitude is if we wait for projects to land in our lap we will starve,” Pryor said. “We need to go out and create our own. That’s the target of this planning process. It really highlights our strengths in Hutchinson and Reno County.”
The data generated from the market analysis won’t just help in recruitment, Teufel said, but should also help existing retailers with investment decisions.
“Say you’re a retailer in Hutchinson, and you want to grow, but you want to take the least risk possible,” she said. “If you add this product line, will it be successful? You can take this data and use it to make decisions … We want existing businesses to use it as much as we do to go after big growth.”
A 'scary reality'
“The underpinnings of every good recruitment is workforce,” Teufel said. “Every growing community needs a talent pool, or a pool to pull from. That’s why workforce development is a challenge we have to tackle. That’s how we’re hamstringing growth.”
“One of the major stress points for me is to try to get a handle on what has happened to our labor force,” she said. ‘Every site decision, once you get on a site selectors radar based on a building or location, the next question is about whether you have a skilled workforce.”
There are some concerns about the workforce, Teufel said, from the number of people who have dropped out of searching for jobs to concerns about passing drugs tests and mastering “soft skills” like dressing appropriately and even showing up for work.
“I think the largest thing I hear from employers is the drug issue is very real,” she said. “If 8 out of 9 people who interview for a job can’t pass a drug screen, or walk away because they know they can’t, that’s a major issue we have to talk about as a community.”
People just not applying for work is a growing trend, not only locally but nationally, Teufel said.
“We looked at our labor force within a 10- and 30-mile radius of Hutchinson and the trends are a scary reality for Reno County,” Teufel said. “Our labor force has declined by 5,000 people in the last decade, but the people are still living here… We’re trying to get our arms around what’s happening, to see why a demographic in their prime working years are choosing not to work. Especially when we talk to a local manufacturer with job openings, who would love to fill them with qualified workers but is having difficulty finding people for those jobs.”
They also recognize, Teufel said, that just over 80 percent of the population has less than a bachelor’s degree, including 42 percent with a high school diploma or less, at a time when jobs are calling for higher level skills.
One of their next steps in working with their consultant, Catalyst, is to try to identify what skill sets are available in the community and what kind of training the workforce needs.
Hutchinson Community College has long been exceptional at responding to local employers in designing training and degree programs to meet business employment needs. Officials expect that responsiveness to continue.
“We know what we’re best at,” she said. “We have excellent healthcare, excellent manufacturing, goods warehousing and distribution. We’re good at diversified services like back office and IT support.”
They also recognize, the chamber president said, that Reno County’s median wage of $14.83 per hour is lower than neighboring Sedgwick County. Half the county's population makes less than that.
They see some wages rise, however, because of the tight labor market, and Teufel supports local government incentive policies that require a minimum $15 per hour wage for new jobs supported by incentives.
“I think every employer has to look within and see if they are as competitive as the can be to find talent,” she said. “It’s been interesting talking to manufacturers. Some are adjusting their wages to meet demand. Those having a harder time probably do need to look at starting wage as a factor.”
A year of change?
Some people have suggested Reno County should attempt to become a hub for warehousing and distribution, but Teufel said the community, not directly on an interstate, is “a bit off the beaten path.”
Instead, she suggested exploring more food processing or value-added agricultural projects.
“Look at Garden City,” she said. “Their retail economy is booming. They embraced food processing when others chose not to. Everyone is going to have an opinion about what they want the community to be. I’ve had some people say they don’t want those jobs; they want more white collar. If you look at our demographics, we have 10 percent less than the Kansas average that holds a bachelor’s degree or higher. If we want to be more white collar, we have to raise the education level of the community.”
“It’s something we have to own,” she said. “If we’re more blue collar that’s great for the manufacturing jobs out there … We have to look at who we are and match those skill sets, then look at a vision for the future of what we want to become. It’s not going to change overnight.”
“We have some great tools in our kit,” Teufel said. “We have great sites, a great work ethic in the community. Many of our people come from ag backgrounds, they know how to work hard, how to fix things with a lot of ingenuity.”
“We’re doing the right things to get potential employers in the pipeline,” she said. “Since Jan. 1 we’ve opened eight new projects. The more we get in, the more we’re bound to win one. You win about 5 to 10 percent in the economic development game, so the more times we can make a pitch the better.”
Pryor contends Teufel’s experience and her belief in the community will make the current effort succeed.
“This is a great community to do business in,” Pryor said. “It just needs a leader that believes in the community and can sell that to other businesses that are looking to expand and move into a Kansas community … I just think Debra has a different outlook on winning, and having the data to support it is why it will succeed.”
“We’re very confident we can get some wins in 2018 with some of the foundation Debra laid when she got here in mid-2017,” Pryor said. “I can’t comment a lot about the projects circling, but she’s got a lot of momentum … I think 2018 will be the year we see change.”
Pulling the community together
Longtime Reno County resident Richard Robl sees a need for more drastic changes, and he's been making pitches to different community groups over the past few months.
“My interest at this point is about a paradigm shift,” said Robl, who operates Service Leadership Consulting. “First, it has to be decided that we need to make changes.”
Robl acknowledges there are many people in the community working to improve it and that good things are happening, “but not to the point that we’re looking at a shift,” he said.
“What are the beliefs or assumptions about what’s working?” he asked. “What’s causing things to change? How do we make the community grow, and quality of life improve? Those are the two outcomes we want. That’s a vision. The first component is to have a vision.”
The next step, he said, is bringing people together to determine what needs to be done to advance that vision and to secure resources. He said more of that needs to be happening.
“We have silos of good people meeting and working on things, but it not across the community fully enough we can say ‘yes, this is the community focus and we need to move forward together on these big steps,’ ” he said.
There are “keystone issues,” Robl said, that will make a more significant difference if full community resources and efforts are focused on them.
“The chamber has a responsibility to its members, so their focus is on member business interests,” Robl said. “We need an organization like the Community Foundation or another group to look at it from the view of all citizens.”
A third component, he said, is to bring more money into the community “by focusing on our strengths, such as medical services, attractions and the retirement community.”
A paradigm shift doesn’t happen overnight and changes are incremental, he said, but there should be goals.
“If we don’t have the focus, it goes astray,” he said. “It’s a challenge, I grant you, but an exciting challenge. We need to make the first step, and that’s to bring people together to create a vision. Then we can focus our resources, which are not unlimited, and move ahead.”
Robl said he has his thoughts on keystone issues: entrepreneurship, affordable housing and focusing investment on community strengths. But he said it’s up to the group to decide on what they are.
“It should come out of the process,” he said.
“I moved here by choice, and I’m staying here by choice,” Robl said. “I’m positive about the community and hopeful about the community, but it’s time to take action now and not to continue to say ‘we’re making progress, everything is fine.’ ”