Business Developments and Concerns for 2020
2020 marks Boone County’s bicentennial, and for many local business owners and executives, it will introduce major changes. Top-of-mind? The Hyperloop, medical marijuana, Landmark Bank becoming Simmons First National, the NextGen Precision Health Institute, Columbia Regional Airport’s developments, use taxes and construction projects.
In response to business trends in 2020, Inside Columbia Publisher Emeritus Fred Parry hosted a CEO Roundtable at Zimmer Communications with 14 local business leaders. The event was sponsored by the Broadway Hotel. The hotel’s award-winning chef Jeff Guinn catered the meal that accompanied the conversation. Zimmer Communications Owner John Zimmer, General Manager Carla Leible and Sales Director Carrie Berkbeugler also sat in on the discussion. Participants included executives from both blue- and white-collared professions. Two things they all had in common? A need for skilled workers and ways to grow Columbia’s economy.
Matt Jenne, owner of Addison’s and Sophia’s restaurants, says that the main problem with the workforce isa smaller pool of applicants to choose from. “Ten years ago, we would get 30 applications and of those 30, we would be able to pick and choose,” he says. “Now we get 10, and we don’t get to pick and choose. It makes it a lot more difficult. But the key is just more people — we just need more people.” Connie Leipard, president of Quality Drywall, faces the same challenges with her construction business. “In the construction industry, we have a work force that’s aging out,” she says. “To recruit entry level workers, we try to talk to high school kids that are not on a career track to go to college, on a college path. A lot of times there’s misinformation about how much money you can make in the trades.” One suggestion Leipard offers is to find a way to reach high school students with information about construction job opportunities before they are influenced to apply to colleges. Michele Batye, president and owner of Dave Griggs Flooring America, agrees that it is difficult to find employees for construction jobs. “The average age of our installer is about 55 years old right now,” she says. “To get new people in there — sometimes it’s a fight even for them to bring someone on to train.”
An aging workforce isn’t only a concern for construction businesses; other skilled-labor companies are having the same issue. Stephen Nagel, general manager of Joe Machens Ford, has also found a deficit of workers. “Everybody drove here today in a vehicle, right?” he asks. “The people that work on your vehicles are becoming fewer and fewer — mine have an average age of 55. I’ve got about eight that are getting ready to retire, all my master techs. So that’s a huge problem. Who’s going to work on your car?”
A solution may already exist to this problem, Wayne Keene, director of the Center for Sales and Customer Development at the Trulaske College of Business, says. “At the University of Missouri College of Business, we’re seeking a number of opportunities to partner with businesses for experiential learning opportunities,” he says. “We’ve got students going through a human resource management certificate program, and maybe that’s an opportunity for us to create some synergies where we can have students be interns for construction companies and doing some of that leg work giving them an opportunity to connect.”
At the University of Missouri’s College of Engineering, experiential education approaches are abundant, Elizabeth Loboa, Dean of the Engineering College, says. “My college has created a construction management minor and certificate program because some of my civil environmental engineering faculty have been hearing from the industry we need more,” she says. “We also have three fully online degrees that students can complete from anywhere (BS in Information Technology, MS in Biological Engineering, and MS in Industrial Engineering) as well as multiple other certificate programs.”
A Need for Vocational Technical Schools
One hole in Columbia’s educational system is a lack of technical schools; the closest being in Rolla, Missouri. “I think there’s a huge opportunity in tech schools,” Nagel says. “There are a lot of students in an hour and a half radius that should be in a vocational tech program somewhere, where they can come out of school making more than $80,000 per year. As a group of businesses, we need maybe an ad campaign, or some kind of outreach, and then a partnership with different schools at a better level than we’re doing now.”
Perhaps the reason for a lack of enrollment in vocational tech schools is messaging, Keene suggests. “Not every kid should come out of school $100,000 in debt, but every kid should keep being educated,” he says. “We need to find a way to say that we’re about education, not necessarily only about college in the way that we have historically defined it. We are an educated community and we value all types of education. We don’t have to decrease one form of education in order to raise up another.”
One collaboration between traditional universities and technical schools is in the works, Loboa says. “We’re talking to Moberly Area Community College about what needs they have and what we could do together to help their students with credentialing or certifications as well as easier transitions into our College of Engineering. These don’t have to be actual majors; what are the certificates or specific opportunities or needs in the industry workplace that we can work with the community colleges on to help develop that workforce?”
This collaborative effort is due in part to UM President Mun Choi’s efforts. “When President Choi joined us a few years ago, ”David Parmley, owner of The Broadway Hotel, says. “I think what impressed me most was how he made a focused effort on reaching out to county extension offices throughout Missouri.”
Retaining College Graduates
Another major issue in Columbia is the new graduate retention rate. Although around 30,000 students attend the University of Missouri, many choose to move shortly after graduation. Recent college graduates tend to compare their job opportunities, both in terms of location and salary, to their friends’, Keene says. They want to go to the popular cities that their friends are going to, such as Denver, but ultimately “when they get there, a year or so into it, whether they miss home or whether they miss what Columbia had to offer and the profitability that it has to offer,” he says. “We’ve had students go and then come back. I think what we’re looking for is how can we get some students infused into what’s happening here, right after graduation.”
Parmley agrees that to a certain degree, students still think they have to go out somewhere else “to try to make their mark — and then they realize how good it is here and they come back,” he says.
Kathleen Bruegenhemke, chief risk and operations officer of Hawthorn Bank, has experienced this first-hand. “My daughter was born and raised here in Columbia, but many of her college friends are from the St. Louis metro area. The challenge we have is retaining those students. They are coming here for four to five years and they already know when they step foot on campus that they’re headed back home after graduation. Our challenge to retain graduates really begins at the high school level.”
It is definitely possible to succeed professionally in Columbia. Recently, a group of University of Missouri graduates gathered at Addison’s South, Jenne says. “We had a group in from the university that was celebrating a patent,” he continues. “It was the third time they had celebrated a patent at the restaurant. And the head of the table said how many here are from Columbia? Almost everybody raised their hand to indicate that yeah, if you stay, Columbia has what you need to succeed. It was pretty powerful.”
One of the root problems behind new graduates leaving Columbia is the innovative and out-of-the-box job opportunities that large companies are offering. “For students in engineering, the job prospects are phenomenal,” Loboa says. “When we have our career fair twice a year, we now have over 200 companies showing up from all over the country. I have students who are signed on lucrative contracts by junior year, if not earlier.”
“The university, regardless of what the discipline is, is very excited to work with local industry to say well, what type of additional curricular offerings is a win-win for companies and for our students?” she continues. “We want our students to be workforce ready and to come out ahead of typical students that are just graduating, but a lot of companies that are coming here are really thinking proactively on how they’re getting these students engaged before they graduate and signing on the dotted line. It’s just getting so competitive for companies to attract our engineering students. So, I think local businesses just need to think outside-the-box because I think most of our students love Columbia.”
The moral of the story? Local businesses have the same opportunity as larger ones to get in on the ground floor with students. And ultimately, local businesses have a leg-up. “You’d be more competitive because you’re here — you could offer these experiential opportunities that these other companies are flying them out to their sites for all summer, but you could do it right here during the school year,” Loboa says.
One way to increase recent graduates would be to increase graduating class sizes at the University of Missouri. Greg Steinhoff, vice president of industry and government relations at Veterans United Home Loans, says that we have a supply problem in Columbia. “We need to challenge the university and the other higher ed institutions in our community to increase their number of students. MU could grow by 10,000 to 15,000 students,” he says. “We’ve been at 26,000 for years. There’s a huge need for educated workers, we have to find ways to meet the needs of companies like Cerner, Boeing and others. We just need more students.”
The barrier to that, Keene at the Trulaske College of Business says, is actually a supply problem of another kind. “We try to keep our classes at a certain size so that we can have that experiential activity,” he says. “We could increase the size of the class to 80 students, but we wouldn’t be able to give them what they need; so, we are looking for more faculty as well. I think we’re on a positive, very positive trajectory, but again those things work in years. It’s not next week we can do it.”
Loboa echoes this sentiment: “When I came in as dean, we were not in a position to grow the undergraduate student population. We are now.” she says. For the College of Engineering, they aim for a student to faculty ratio between 20 to 1 and 25 to 1. When she became dean, some departments were over a 40 to 1 student faculty ratio due to the immense popularity of their engineering degrees. “We’ve brought in about 40 new faculty in a college that had approximately 100 over the past few years,” she says. “So now we are at a point where we will start growing students again, but we’re going to do it very carefully and strategically to ensure we continue to provide the very best experiential education for our students and every opportunity for them to become engineering leaders.”
Continued replacement of old and building of new buildings will also help MU continue to grow its class size. “We have an infrastructure issue,” Loboa says. “If you listen to Gary Ward on campus, there are significant issues with maintenance and buildings that should come down and new buildings that need to go up. This planning is happening and one of the most exciting new facilities to be built will be finished in 2021. It will be a great attractant as we continue to recruit world-class faculty and frankly that will also help recruit more students.”
NextGen Precision Health Institute
The NextGen Precision Health Institute, the University’s largest building project in its history at 265,000 square feet, broke ground in June and is expected to be completed by October 2021. “The NextGen Precision Health Institute is showing University of Missouri and MU Health Care to be a nationally recognized health care system for national and international health care companies that need a clinical partner. The two best examples include MU Health Care’s work with Cerner and Siemens Healthineers. Jonathan Curtright, chief executive officer of MU Health Care, says. “We’re getting this reputation as being a great partner; Siemens Healthineers, which we are partnering with for the health institute, is going to be bringing in jobs to our community.
“MU Health Care is big enough that it matters, and small enough that you can get very complex work completed on time and on budget — that’s helpful to a company like Siemens Healthineers or Cerner, or some of the other big companies that want to do business and need patients,” Curtright continues.
“This is a game changer for the state,” Loboa adds. “There’s no other university or system with MU Health Care that can achieve the innovative collaborations and technologies and I think cures that will come out of this institute.”
The Landmark-Simmons Transition
Starting sometime in 2020, Landmark Bank will become Simmons Bank as part of a $434 million merger. “Simmons is a great organization which has been on a phenomenal growth trajectory,” Hawthorn Bank’s Bruegenhemke says. “Simmons entrance into Columbia will create opportunities for all financial institutions as customers evaluate their banking options. Years ago, size really did matter as the mega banks were the only financial institutions that could afford the back-office technology which is commonplace today. However, the playing field has been leveled for community banks due to the drop in the cost of that same technology. At present, there is no unique service that a mega bank provides that local community banks are not also able to offer.”
They will certainly create disruption, Steve Erdel, chairman and CEO of Central Bank of Boone County, agrees. “Simmons will have new products and services that aren’t available at Landmark today, but I think that will be an opportunity for us. They’ll bring some power to Columbia that perhaps Columbia needs. Columbia is growing and we want it to keep growing.”
Although Simmons may bring some positives, it will create more competition in Columbia’s banking market. “Certainly, we’re trying to develop strategies around that,” Mike Ireland, regional president of The Bank of Missouri, says. “It’s an opportunity not just from a customer acquisition perspective, but from a talent perspective, so we’re trying to be well positioned to take advantage of some of that.”
Boone Hospital’s Looming Independence
On January 1 of 2021, Boone Hospital will become an independent institution. This is due largely to growing differences between BJC and Boone Hospital, resulting in challenging times. “The hospital has not been performing well financially,” Steinhoff says. “We’ve seen losses for each of the last three years. It made sense after a series of consultant reports, industry studies and market analysis, for us to bring Boone back from St. Louis.” The goal is to get the hospital operating independently and back on solid footing. “We’re determined to bring back Boone.”
Although MU Health Care’s doctors outnumber Boone Hospital’s, the MU Health Care system is only 1/5 the size of BJC, Curtright says. “We’re big by Columbia standards, but we’re relatively small compared to most national organizations. We must generate more scale to drive down our operating costs and to get more profitability.”
One way to do this? Collaboration. “I think that there are incredible opportunities to work with Boone Hospital, with Jefferson City, the Lake of the Ozarks through our partnerships with Capital Region Medical Center and Lake Regional Health Systems,” Curtright continues. “We must bend the cost curve of healthcare in Columbia — and that means we have to work together. That will require a lot of working together in a very close way.”
This concept, known as coopetition, is top-of-mind for John Zimmer, president of Zimmer Communications. “This concept of coopetition, of how do you compete and how do you cooperate — what are the backend resources you can share — is essential in today’s market,” he says.
Columbia Regional Airport
Columbia’s airport has been a blessing for those traveling often for work, with no reason to drive two hours to either Kansas City or St. Louis, but it isn’t without its problems. “I’ve done a lot of flying the last several years being on the National Association of Women in Construction (NAWIC) board,” Quality Drywall’s Leipard says. “And it was difficult trying to get in and out of Columbia Regional Airport. We have two airlines with one way to get through security. It’s going to be wonderful when we get a new terminal. My concern,” she continues, “is on the flip side, the infrastructure will have a little less regulation, and the cost to develop in Columbia is ridiculous due to the delays.”
When it comes to slow building times in Columbia, Parry, who is also a Boone County Commissioner, admits that there are barriers in place. Recently, the county commissioners were told to put a moratorium on housing projects in the west area of Columbia for 18 months.
These issue are part of a larger one: Columbia’s growing pains. “I think we have a problem,” says Central Bank of Boone County’s Erdel. “Our community is going to grow. We lack building lots now, we lack affordable housing — we’ve got a myriad of problems. What concerns me is that we’ve got to have municipalities to afford the growth Columbia is going to have.
“We’ve got to be able to provide essential services, fire, police, sewer services and so on. Our municipalities are about broke — they’re at the end of their string. They need additional income or tax support.”
One reason Columbia’s municipalities are lacking funds, Jenne says, is because of online shopping. “If people are buying everything on Amazon,” he says, “we don’t see the sales tax from local shops coming in — they just can’t compete.”
Although Amazon may be transforming how people shop online, brick and mortar businesses still have a lot to offer. “We’re very lucky to have a unique downtown that people want to come to and experience, and for the foreseeable future, I don’t think Amazon can deliver that experience to your doorstep,” Parmley says.
According to Paul Land, owner of Plaza Commercial Realty, the unemployment rate in Columbia is somewhere around 1.7 percent — an extremely low number. “For the first time in my career,” Land says, “it’s affecting real estate decisions. People are delaying business expansion decisions because of staffing problems.”
And although many roads have been improved during Land’s career in Columbia, there are some roads that have been left wanting, such as I-70, which has not been expanded through Columbia since 1964. As Columbia continues growing, road improvements will be vital.
However, the recent attention on the I-70 bridge is excellent for business, Batye says. “I’m on the board at the Chamber of Commerce and it was a huge issue that we talked about constantly — that if the bridge hadn’t been approved, what that would mean for Columbia.”
But perhaps the biggest problem in Columbia, especially for those working in skilled careers and recent graduates, is the cost of housing. The median housing price in Columbia is around $231,000 Leipard says. “It’s too much for the blue-collar worker to live in Columbia, so they’re going out across county lines into Callaway, New Franklin, even Boonville. The barriers to the construction and development of new homes, as well as the barriers to decreasing their prices, need to be discussed by our government officials both in the city and county because it is affecting the growth of Columbia. Many of my employees would like to live in Columbia but cannot because of the inflated housing prices.”