Welcome to Springfield Business Journal’s 2013 Economic Outlook edition. This section is built around Greene County’s top employment sectors, based on 2012 data from the Missouri Economic Research and Information Center.
MERIC’s data encompasses average employment and weekly wages, total wages and number of firms. Leading the way in 2012, the health care and social assistance industry added 23 firms and about 800 jobs in Greene County. See the complete list on page 12.
This section will take a closer look at five of the county’s key employment sectors. We asked industry leaders to address the challenges of 2012 and what lies ahead in 2014.
Government 
Ralph Rognstad Jr.
Director of planning and development, city of SpringfieldSpringfield is a community where we live and play, but like all cities, it exists primarily as a center for economic activity where residents have businesses and jobs. It is this economic activity that makes the living and playing possible. The city’s Planning and Development Department is responsible for directly supporting economic development and activity. The four main areas of focus are business attraction and retention; business incentives; downtown revitalization; and the land development process.
We work closely with the Springfield Area Chamber of Commerce on business attraction and retention. Bringing new businesses into the community is important because they can increase the diversity of the local economy.
The city offers incentives to targeted industries making a new investment in the community. These incentives typically take the form of partial real property tax abatement and are available to new and expanding businesses. The city has been a leader in encouraging the revitalization of our center-city business districts. Our Small Business Loan Program provides funding to acquire and rehabilitate center city business buildings while the Business Incentive Program assists small businesses create jobs in targeted areas. During their 30-year history, these programs have been used to stabilize many downtown buildings that could have fallen into major disrepair and been torn down. Retaining the historic buildings is important to creating a sense of place in the center city that contributes to economic activity.
The land development process has a significant impact on where and how economic activity occurs. The challenge is to provide as much opportunity as possible for people to engage in economic activity. Economic activity has the potential to occur anywhere in the community 24 hours a day. It can be something as simple as pulling out a smartphone to respond to a business email at home. However, technological advances now allow a person to manage a large-scale enterprise without ever leaving home.
There are also evolving societal desires for more integrated living and working environments. These changes begin to create a blur between the live and work space that reflects a return to an earlier time when the home was much more of a center of economic activity and the entire family participated.
This has the potential to create tensions because development patterns during the past 75 to 100 years have created a distinct separation between where we live and work.
The department has been working on a new initiative to encourage development of live/work districts that are residential in character and where business owners can have their business as part of their residence.
The two areas of the city where we are currently working to establish these districts are the West College Street corridor and the Moon City Creative District. A significant advantage is that a live/work unit can reduce the costs to the business owner by being able to live and work at one location.
This concept is not totally new to Springfield. People have live/work units on Commercial Street and Walnut Street, but this expansion in appropriate areas will potentially increase the chances of success of the businesses and maintenance of the buildings.
Real Estate 
Jessica Hickok
Association executive, Greater Springfield Board of RealtorsOne of the driving forces of economic development is real estate. Yes, industry sectors such as medical and education are also important, but in order for any development to happen, it requires real estate, both commercial and residential. In order to bring dollars into the community’s events, sports games and charity auctions, the local resident must have just that, a place to reside.
Springfield Multi-List is a database that keeps track of how many residential homes are listed, sold and put under contract every day. An active, licensed Realtor member of the Greater Springfield Board of Realtors has access to this robust MLS data.
There are two sides to a real estate market Realtors often watch, similar to a stock broker watching to see if the market is a bear or bull market. The two sides watched are if the industry is in a seller’s market or a buyer’s market.
Right now, the seller’s market is where Springfield and the surrounding area is sitting tight as we have been since the beginning of 2013. There are currently 5.7 months of inventory on the MLS. This means if everything in the MLS were to sell and nothing were to be listed, then we would be completely out of inventory and the real estate market could potentially come to a halt. The chances of this happening are slim to none.
The National Association of Realtors said when there is less than six months of inventory on the market, it is considered a seller’s market. Now is a good time to list your property for sale, as you will likely get top dollar for it if it is priced right. It won’t sit on the market for too long.
According to the Bureau of Economic Analysis and the NAR, the real estate industry accounted for $33 million, or 12.8 percent, of the gross state product in Missouri last year. If you account for the additional revenue brought into the state, such as furniture and appliance sales to furnish the new home, dinners out at restaurants while the kitchen is being unpacked from the move, paint, new carpet and other items to freshen up the new place, there is a lot of money that comes into the Springfield area. This is also added to by the ongoing and sustaining dollars invested into the community for entertainment and shopping.
The average sold price of a residential home in Springfield is $148,000. According to statistics, this means each sale of a home in Missouri brings in an average income of $41,354 to our state. Because of market upswings, this number could only become greater.
Construction 
David Foreman
President, Springfield Contractors AssociationThe construction industry outlook for the next 18 months is, in a word, optimistic. All indicators point to a return to the good old days, but likely with a few wrinkles. Dollar volumes will approach those seen prior to the most recent downturn. The wrinkle is that our contractor, subcontractor and labor bases that existed then have naturally shrunk to fit that downsized market.
For most, if not all, on the supply side of this equation, the positive growth only has upside potential. The problem for them will be finding the necessary qualified labor to expand into the growth. Talking with several industry owners, they believe this will be the biggest hurdle they will face going forward. Another challenge for them will be to increase their bonding and financing capacity. Planning ahead on these issues is a must.
For owners, the obvious challenge will be rising costs and finding qualified bidders. It seems everything from energy, fuel, food, transportation, raw materials, health care to permits and money itself is costing more these days. The sheer volume of work and hard-to-get quality subcontractors will naturally drive the market upward. The projects that are most deserving will get the best pricing and craftsmen. These projects must have clean plans and specifications, be well-financed and have a fast closeout.
Competition for area construction services is substantial. Recently, contractors have found refuge to the west in the Joplin area and south into northwest Arkansas. While providing sustaining revenue, it will be difficult to get them back into our market full force while the potential for future construction in these areas is high.
Highway funding will be in the tank until a new source of revenue is found. Recently, a proposed sales tax vote was defeated in Jefferson City. It would have provided approximately $900 billion in additional funding during several years for much-needed projects. We will hear much on this issue until it is resolved.
One owner, Missouri State University, is going to have its largest construction year ever (by dollars) in 2014. MSU is not alone in projecting a large volume of construction work next year. As sophisticated proactive owners, they have decided to work with SCA and the Springfield Area Chamber of Commerce to educate the construction community about their upcoming work with a Bidding Forecast Forum on Sept. 20. Events such as this will be a win for the construction industry and the owners wishing to get their projects delivered on time and on budget.
Education 
Hal Higdon
Chancellor, Ozarks Technical Community CollegeThe Springfield region is privileged to have a diversified economy. A critical component of that economic diversity is the higher education sector. We are blessed with many outstanding public and private higher education institutions that offer a number of different certification options, as well as degrees ranging from an associate’s to a doctorate.
The higher education sector is unique within the economic engine. Not only does it provide opportunities to students, but it also offers employment to a large number of people. There are more than 49,300 students attending Springfield-area colleges and universities – several thousand of which are not native to this region. These students stimulate the local economy through basic living expenses, as well as lifestyle purchases. In addition to the stimulus brought on by students, there are more than 8,000 people employed within higher education in this region. Through salaries, purchases, economic development and improvement of our residents’ earning ability, colleges and universities in the Springfield area contribute hundreds of millions of dollars annually to the local economy.
Currently, the number of graduates from Missouri high schools is at a low point; however, local colleges and universities overall are seeing steady enrollments, suggesting that more than just traditional aged students are enrolling in higher education. Yet, while enrollment remains steady, state and federal funding for higher education remains anemic. Nationwide, Missouri ranks near the bottom in funding for its public colleges and universities. Moreover, within Missouri funding is disproportionate, with Missouri State University and Ozarks Technical Community College ranking at the bottom for state appropriations. Ultimately, inadequate funding will affect students’ ability to afford college and consequently increase overall student debt.
The lack of investment in higher education by the state of Missouri is not merely a threat to individual institutions; rather it is a threat to the economic vitality of the region and our state. As job requirements change, older adults are returning to higher education for either advanced training or an education leading to an entirely new career. It is our responsibility to meet their educational needs with the most up-to-date technology and outstanding classroom faculty.
For those who obtain additional education, the statistics reinforce a direct correlation between education and earning potential.
The partnerships between higher education, businesses, local government and K-12 education mean our region is better positioned to respond to challenges. The economic outlook for higher education in our area is strong, but critical funding issues must be addressed sooner rather than later.
Health Care
Jay Guffey
Chief operating officer, Mercy Hospital SpringfieldThere is one thing I am certain about this year in health care – it is an incredibly uncertain time.
We in health care support the aim of the Affordable Care Act, which is to: 1. Provide better individual care; 2. Better population health; and 3. Lower the cost of care. Whether the ACA will actually promote better individual care and better population health is still unclear. The only certain part is payment reform.
ACA payment reform is enormously complicated, has had multiple regulatory delays, and it is unclear whether it will actually reduce costs in the end. The only thing for certain is that the ACA reduces payments to hospitals and clinics.
Hospital payment reduction is especially true in states like Missouri that did not pass Medicaid expansion.
Here’s why: The idea was that hospitals would see fewer uninsured patients, because more people would receive insurance through the new health insurance exchanges or expanded Medicaid coverage and would be able to pay for health care.
Also, instead of accessing health care only at the most expensive location – the emergency room – people would now be able to access primary care and could better maintain their health. ERs are overwhelmed. Last year, Mercy’s Springfield ER saw 95,300 patients. Of those, 40 percent had no insurance or Medicaid coverage.
Here’s another uncertainty: The health care exchanges are supposed to be open in just a matter of days. We don’t know yet whether the plans will be affordable, or whether people will enroll.
Without the Medicaid expansion or individuals signing up on the health exchanges, hospitals and clinics will see less reimbursement and have nothing to offset the loss in federal payments.
We all need health care, and our communities need health care providers to help the local economy. Mercy is Springfield’s largest employer, with a payroll of $650 million. It costs another $35 million each year just to keep equipment and facilities from rusting out, and that creates jobs for local workers who replace roofs and maintain air conditioning units. Mercy also provides care for those who can’t pay. In fiscal year 2013, Mercy Springfield’s cost for providing charity care in southwest Missouri was $38 million.
Because of federal funding uncertainties, hospitals will need to think of new ways to deliver health care in 2014 and beyond.
