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How will Wichita respond to a 'wake-up call' for its economy?

"The market is saying very clearly that the Wichita way is not working," analyst James Chung told Wichita city officials, civic leaders and business people at a presentation last week.
"The market is saying very clearly that the Wichita way is not working," analyst James Chung told Wichita city officials, civic leaders and business people at a presentation last week. The Wichita Eagle

Amid an avalanche of sobering data that indicates Wichita's economy continues to flounder, one statement by analyst James Chung stuck with Fidelity Bank president Aaron Bastian.

"It was 'We’re starving our city,'" Bastian said. "That just hit me like a bucket of water."

Bastian and other community leaders left the analysis of Wichita's economy last week with a clear mission.

"We need to do more," Bastian said. "What we're doing is not enough."

The data was so stark that a summary of Chung's presentation used the word "catastrophe."

Among the numbers:

While the gross domestic product for cities across the U.S. grew an average of 16 percent this decade, Wichita's dropped a percentage point.

Every city in the central U.S. comparable to Wichita grew faster than the national average since 2010. Not Wichita.

The U.S. labor force grew significantly over the past decade. Wichita's shrank.

The result is a constrained labor market for Wichita, Chung said, which makes it harder for businesses to grow here, harder to attract businesses to come here and harder for ventures to blossom here.

"The market is saying very clearly that the Wichita way is not working," said Chung, who was raised in Wichita, trained at Harvard and now runs Reach Advisors, a New York-based strategy and research firm.

'Do something radically different'

Mayor Jeff Longwell called Chung's presentation a call to action.

"I don’t want to say, 'Don’t panic, folks,'" Longwell said. "I think there deserves to be a wake-up call."

Chung's firm was hired three years ago by the Wichita Community Foundation to analyze Wichita's strengths, problems and potential. His initial report was sobering, saying Wichita had lost what made it special.

His final look was not without glimmers of hope. He noted the city's perception of itself had improved dramatically over the past two years and that some initiatives show promise. But, he emphasized, city leaders and residents can't afford to relax.

In the wake of Chung's presentation, government and civic leaders alike agree that changes are necessary. Some residents called for sweeping changes.

Alex Pemberton tweeted that he wanted to see "a more-or-less wholesale change in leadership, in both the political and civic sectors."

"Get rid of all the leaders-in-title-only who care about their legacy or job security and replace them with real leaders, who will take bold action and engage in honest, critical conversations," said Pemberton, who two years ago founded the Yellowbrick Street Team, a grassroots movement known for drawing attention to urban-living issues until it went on hiatus early this year.

Others on social media voiced support for bringing better-paying jobs to the city and expanding Wichita's public transit system so it's easier for people to get to and from work in a cost-effective way.

"Most of us aren't even able to comprehend" the issues that have limited Wichita's growth for so long, said Andrew Gough, who owns Reverie Coffee Roasters, which has two locations in or near downtown.

Most Wichitans are more concerned about getting to work on time and road projects than they are about venture capital levels or why the private sector isn't investing more in the community.

"It’s apparent that whatever we’re doing isn’t working, and just like in any business, you’ve got to do something radically different" in response, Gough said.

Yet change won't come easily, an economist said.

"It is a challenge going forward to change the economic development model," said Mike Busch, senior research economist at the Center for Economic Development and Business Research at Wichita State University. "It’s sort of a chicken-and-egg problem" for Wichita.

Wichita has a low unemployment rate, which means there isn't a large pool of unused workers that a business looking to relocate or expand might find appealing, Busch said.

Similarly, he said, there haven't been major businesses moving to Wichita and offering the kind of wages that would draw workers to the city.

Spirit AeroSystems CEO Tom Gentile announced the unveiling of the company's new Global Digital Logistics Center, a seven-story 150,000-square-foot building as part of a $1 billion expansion that includes over 1,000 new jobs. (May 21, 2018)

Restructuring approaches

In response to Chung's initial report in 2015, officials restructured Wichita's economic development efforts into what eventually became the Greater Wichita Partnership, which works to develop growth in Wichita and the surrounding 10-county region.

The partnership's success stories include keeping Cargill's protein division headquarters in Wichita and Spirit AeroSystems announcing a $1 billion expansion and hiring 1,000 more workers.

The number of prospects the partnerships is engaged with doubled to 70 in just one year, partnership officials said, and interest in the city continues to grow. The city and surrounding area have seen $239 million in new capital investment so far this year, including $180 million in new equipment and real estate improvements for a new biofuels plant in the suburb of Colwich.

Longwell said the city is "working on a river corridor development that will be a game-changer," though he would not offer details.

"We shouldn’t lose sight that we’ve already planted the seeds of opportunity and we haven’t yet been able to harvest them," Longwell said.

City Council member Jeff Blubaugh said he wasn't too discouraged by Chung's report because a lot of recent developments weren't reflected in the numbers. "I really think we've made a lot of progress," Blubaugh said.

Along with the Cargill and Spirit announcements, he said, aircraft subcontractors and other smaller businesses are growing.

But Wichita can and should do more, he said.

While he's quick to say "I don't want to start raising taxes," Blubaugh said Wichita is still "more restrictive" than it needs to be when it comes to development.

"Whenever we do use economic incentives" such as industrial revenue bonds "that really aren't costing the city anything, there's still a public misperception that we're handing people money."

The city needs to be saying "yes" more often "if it's not affecting our bottom line," Blubaugh said.

Friends University political science professor Russell Fox says Wichita, with its conservative mindset, has "a 'no' mentality" that has limited what the city could have done.

"The truth of the matter is, Wichita is a city caught in the middle," Fox said. "It's a city that looks like it ought to be doing what other cities are doing but isn't."

Residents must ask themselves whether they want Wichita to remain a "steady state" city — not growing, not dying — or whether they want the city to reach the potential so many envision, Fox said.

Voters will say at the polls whether they want to keep things as they are, Fox said, or prefer a different future. To get that different future, he said, residents have to send the message to officials "they should be spending more, risking more, investing more."

Brian Sikes, head of Cargill's protein division in Wichita, announced at a news conference at the Wichita Metro Chamber of Commerce, that the company would remain in Wichita, and build a new campus in a yet-to-be determined location. Cargill had l

Reconnecting with Wichita's 'DNA'

City Manager Robert Layton said officials may need to explore putting more effort into helping smaller businesses grow.

"Most job growth occurs in small-business development. It’s in our DNA in terms of business start-ups and growing small businesses," he said, pointing to entrepreneurial success stories such as Pizza Hut and Rent-A-Center.

But over the past two years, Wichita has seen just $5.4 million in venture capital invested in five tracked deals. Over that same period, Omaha saw nearly $21 million invested in 15 deals, and Des Moines had $130 million invested in 23 deals.

"We know that that is not where we are today, but why not?" Layton said. "Why shouldn't we be looking to help small businesses develop?"

One element of Chung's presentation that stuck with officials in both the public and private sector was levels of private sector investment in their communities.

The Wichita Community Foundation's assets total $80 million. That figure is dwarfed by the $331 million of the Grand Rapids Community Foundation, the $545 million of the Des Moines Community Foundation and the $1 billion in the Omaha Community Foundation.

Those figures left City Council member Cindy Claycomb with many questions.

"How are these other communities investing in themselves?" she asked. "Somehow they are re-investing their money back into the community.

"Why aren’t we re-investing? What’s holding us back? Why don’t people feel the need to re-invest in the local community?"

At the end of Chung's presentation, the Wichita Community Foundation announced plans to invest $1 million to create the Talent Ecosystem Fund. An initial grant of $500,000 will go to WSU Tech — formerly Wichita Area Technical College — to help pay cost-of-living expenses for students who want to relocate to Wichita and train for certain careers.

There is "a lot more opportunity" for local firms to assist the nonprofit sector than is happening right now, Bastian said.

He plans to build private sector participation "one conversation at a time," he said. "I can only have so many conversations. We need to have hundreds of conversations going on all the time."

More Wichitans want to stay

There was one piece of data in Chung's latest report that Bastian called "the light at the end of the tunnel."

Just 27 percent of Wichita residents wanted to stay in the city in 2016, but that number jumped to 42 percent this year — a number on par with other Midwestern cities.

People are more optimistic about Wichita's future, too: 36 percent this year, compared with 20 percent two years ago.

That shift is huge, Bastian said.

"Perception’s the leading indicator" in how a city's trending, he said. "You're not going to get a business person to invest more in a town they don't believe in. It's just not going to happen."

Young professionals won't stay in a city they don't enjoy, Bastian said.

"They'll leave. They'll scatter," he said. "If they're looking to leave, they're not going to buy a house."

Chung's bleak outlook caused some who attended his presentation to question, at least briefly, whether they should stay in Wichita.

One was business consultant Jill Miller, who was upset by research showing the pay gap for women is worse in Wichita than it is nationally.

"I knew that things were hard for women in business in Wichita, but that data smacked me in the face," Miller said. "The numbers are the numbers. It wasn't just a perception. It is the data."

Miller later changed course and, with Britten Kuckelman of WSU Tech, will convene a panel of businesswomen on June 28 to launch a discussion on how to change things for women in business in Wichita.

Murals running down the middle of Douglas Avenue, are part of a Douglas Design District initiative where the median area will be outlined and painted with a bright geometric designs.

'Do it faster'

Project Wichita is coming along at an ideal time, Bastian said. The community engagement project is gathering public input on what residents in and around Wichita want the region to look like in 10 years.

Public officials have said they want to use the results of Project Wichita to help shape development priorities.

"We’re a couple of months away from getting feedback from thousands and thousands of people telling us 'Here's what's important. Here's what we care about,'" Bastian said.

There's plenty of evidence Wichita has taken important recent strides to revitalize itself, he said.

"We just need to do it faster and more of it, and we need to do it now."

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