Springfield gets high marks for low costs

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For businesses in Springfield, the price is right.|ret||ret||tab|

Forbes Magazine's listing of the Best Places for Business and Careers ranks the Springfield metro area No. 21 when it comes to the cost of doing business in the United States.|ret||ret||tab|

This is the first year that Forbes has focused on the cost of doing business which includes the prices of labor, energy, taxes and office space as an element of the Best Places for Business and Careers list. |ret||ret||tab|

The other categories were job growth and educational attainment.|ret||ret||tab|

Springfield, which was ranked No. 57 on the overall list of Best Places for Business and Careers, didn't fare as well in the job growth and educational attainment categories, ranking No. 100 and No. 102, respectively.|ret||ret||tab|

Greg Williams, senior vice president of Economic Development with the Springfield Area Chamber of Commerce, said while Springfield has received many types of recognition, a high ranking in Forbes is more meaningful.|ret||ret||tab|

"It's just a real credibility factor when a nationally recognized and reputable company like Forbes (acknowledges Springfield). It just reinforces what we try and sell and communicate on a daily basis," Williams said.|ret||ret||tab|

Overall, Austin, Texas, is the top-ranked metro area for Best Places for Business and Careers. Tulsa, Okla., was the No. 1 ranked metro area in the cost of doing business category.|ret||ret||tab|

Springfield has the smallest metropolitan statistical area listed in the top 25, with 331,000. |ret||ret||tab|

At the time of the survey, the Springfield MSA included Greene, Christian and Webster counties. Polk and Dallas counties have since been added to Springfield's MSA.|ret||ret||tab|

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Competitive ability|ret||ret||tab|

Research by Springfield-based companies confirms the Forbes research.|ret||ret||tab|

Springfield's low cost of labor, utilities and real estate makes it a market that can compete nationwide, said Dennis Sheppard, chief financial officer of SRC Holding Company.|ret||ret||tab|

SRC recently compared Springfield to 17 different locations across the nation, including Long Island, N.Y., Redwood, Calif., Des Plains, Ill., Flint, Mich., Louisville, Ky., and Memphis, Tenn. |ret||ret||tab|

"What we try to do is, we try to figure out what our competition's (parameters are and) what our parameters are for putting together the same bid," said Sheppard. "Where this information becomes critical for us is in our ability to compete with somebody who is located in Detroit, or Flint, Michigan, or Toledo, (Ohio) or Atlanta, Georgia."|ret||ret||tab|

According to SRC's research, Springfield ranks the lowest for labor cost at $9.50 an hour, $1.13 below the national average. When it comes to the average price per square foot on commercial space, Springfield was the second lowest at a cost of $3.10, or $1.53 below the national average. Memphis, Tenn., had the lowest cost at $2.63 per square foot. Gas, electric and vacancy rates in Springfield are all slightly above or below average, according to Sheppard.|ret||ret||tab|

"Springfield is not the lowest in all the categories, but on average we certainly compare favorably in most of the categories on a national basis and in a number (of categories) certainly in the lower quadrant," Sheppard said.|ret||ret||tab|

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Utility cost|ret||ret||tab|

According to the Springfield Area Chamber of Commerce, utility costs are lower here than in most cities in the United States.|ret||ret||tab|

"We are in the bottom 10 percent in the country for the cost of utilities," Williams said.|ret||ret||tab|

A utility figure compiled by the American Chamber of Commerce Researchers Association shows utility rates in Springfield are 75 percent of the national average. |ret||ret||tab|

In Missouri, Springfield's rates were among the lowest, according to the National Electric Rate Survey from Jan. 1, 2002. Based on 1,000 kilowatt- and 400,000-kilowatt hour usage, Springfield's cost equaled $16,375 compared to St. Louis at $16,690 and Kansas City at $20,026.|ret||ret||tab|

Cathy Meyer, manager of pricing for City Utilities, said municipal ownership, nearby fuel supply and careful management of facilities help keep utility cost low.|ret||ret||tab|

"We have well-maintained generating units that are competitive in the marketplace, so we can generate electricity at a below-average cost. We work hard to produce electricity and sell natural gas efficiently and help keep the rates low," Meyer said.|ret||ret||tab|

Bills for commercial customers range from $15 up to $250,000 per month, Meyer said. For the month of June the average price paid by commercial customers was $4.62 per kilowatt hour; for industrial customers cost was $3.89 per kilowatt hour.|ret||ret||tab|

Having low utility cost is important to Springfield's future, Meyer said, and City Utilities hopes to maintain a consistent low average.|ret||ret||tab|

"Obviously, (rates) will move around, but we would anticipate staying considerably below the average going into the future; that's one of our objectives," Meyer said.|ret||ret||tab|

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Labor force|ret||ret||tab|

Mixed with utility savings is labor savings. |ret||ret||tab|

O'Reilly Auto Parts, which has more than 1,000 locations across the United States and 11 nationwide distributions centers, has found savings in Springfield.|ret||ret||tab|

"I know we've done surveys as we've looked to expand and even compared to Kansas City, Oklahoma City, (Okla.), Dallas and Houston, where we have other distribution centers and Springfield is definitely cheaper," said Jim Batten, chief financial officer and vice president of O'Reilly Automotive Inc.|ret||ret||tab|

According to income and wage rates compiled by the U.S. Department of Commerce Bureau of Economic Analysis in 2001 the average wage in Springfield MSA was $26,978, and the average MSA household income was $34,661. Average wage rates were $14.72 for manufacturing positions, $11.71 for non-manufacturing positions and $14.60 for government positions. |ret||ret||tab|

Steve Pope, vice president of human resources for O'Reilly, said savings from lower wages and a lower cost of living are a benefit.|ret||ret||tab|

"If you are able to pay $10 instead of $15, if that is the competitive rate of pay for that position, and you're able to pay less than your competitor, who is having to pay $15 an hour for that same job somewhere else, that is a competitive advantage to you. You are able to pay less and so thus you can price your product less or your service less and hopefully get more business as a result," Pope said.|ret||ret||tab|

While Springfield's wage rate may be lower than other cities, Williams said it works well with the lower cost of living factor. Springfield's total cost of living ranking is 88, with 100 being the national average.|ret||ret||tab|

"We are sometimes recognized as a lower-wage region, but our dollar obviously goes a lot farther here than it would in other cities," Williams said. |ret||ret||tab|

"When you start blending groceries, real estate, utilities, transportation cost and those other items and see that we are 12 percent below the national average, that puts us in a pretty competitive average," he added.|ret||ret||tab|

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