Community leaders assess economic outlook for 2008
Columbia Business Times: Do you believe Columbia’s economy in 2008 will grow at a faster, similar or slower pace than in 2007?
Erdel: Because 2007 was slower than anticipated, I think 2008 will be about the same. It will be a year when the real estate marketing continues to be a challenge and Columbia faces increasing competition to its sales tax base. In the past, Columbia was an isolated regional shopping destination, but there are alternatives now. It will be important for us, as a city, to attract visitors and newcomers and keep them here. Part of this economic softness will be mitigated by anticipated Federal Reserve interest rate cuts, but we have to be aggressive in bringing in new jobs and helping local businesses to grow more of them. It is a tough marketplace out there for everyone, and we have to make it easier for businesses to compete effectively. Good business means good jobs, which means good income to spend. 2008 should be a great time to work on the basics of building a strong economic engine for the future.
Maledy: I believe Columbia’s economy will grow at a pace similar to 2007’s. It appears the challenges with credit and the real estate market will continue during 2008 and may hamper growth. This slowdown should be offset to some degree with lower interest rates and economic benefits derived from large construction projects by the University of Missouri, Discovery Ridge and others.
Nauser: While I do not have a background or formal training in economic trends, I believe that the local economy will follow the national trend and show only a moderate growth in 2008. With the rising costs of utilities and gas, people do not have the same purchasing power they once did. Unfortunately our economy is consumption driven; when people have to focus on the essentials, there is not much room for other luxuries. Adding to that is the slowdown in the housing market, which is a large employment factor in our community and provides the creation and support of ancillary businesses, all of which generate sales tax revenue needed to support local government services.
Wolverton: I believe Columbia’s economy will grow, but it will be very slight. In fact, I believe the growth will be small enough that most people will feel like we are not growing at all. The reasons:
1. Interest rates are dropping and, I believe, will continue to drop through 2008. Major election years are normally kind to interest rates, and I see no reason 2008 would be an exception.
2. I believe the home building business will regain some of the footing that was lost in the second half of 2006 and all of 2007. We have paid, and will continue to pay, for the sins of over-building in the residential market. However, there are still buyers in our market, interest rates are strong and getting stronger, and I believe there is a pent-up demand that will be revealed in the spring of 2008. New home construction will return to realistic levels in 2008. We will never again see the 1,000 new homes-per-year pace that we saw a few years ago unless we land a major new employer that brings in a lot of good jobs. However, I do think we will see 300-400 new homes built in 2008, of which the lion’s share will be pre-sold custom homes.
3. The University of Missouri Hospital and Boone Hospital are undertaking major expansions, which will be positive for the commercial construction industry and bring more jobs to the area. Discovery Ridge is getting ready to take off and make a major, long-term, positive impact.
4. We cannot underestimate the positive influence of a successful major college football program to our local economy. Football brings in dollars from all over the country.
Columbia Business Times: At the Economic Outlook Conference on Dec. 4, consultant Dennis Donovan discussed Columbia’s assets and liabilities and gave 10 suggestions for competitive improvement. What do you believe are the top one or two actions Columbia needs to take to improve its economy?
Erdel: It all comes down to having pre-zoned, shovel-ready sites with utilities, combined with reasonable incentive packages for businesses. No one really likes these incentive programs, but these days, they are the rules of the game. You can’t attract new businesses without them, and you have to ease the process of getting a business started in your community. We will continue to lose jobs locally and be unable to attract new ones without these two things.
Maledy: I think Mr. Donovan’s suggestions are exciting and insightful. In my opinion, the most significant and long-term impact will come from the actions related to workforce development. With Columbia’s relatively low unemployment rate, we need to reassure the companies considering a move to Columbia that we have a well-educated and properly trained workforce. In addition, our existing businesses need access to quality employees to continue to grow. Therefore, actions No. 3. (help generate more graduates of technical trades), No. 4 (coordinate effort aimed at adult basic skills remediation) and No. 9 (create a bioscience high school) all focus on a productive workforce, which will help attract and retain higher-paying jobs in Columbia.
Nauser: Many of the items on Mr. Donovan’s list are going to require the private market to fix, such as availability of sites, modern buildings, etc. It is our responsibility to ensure that the city ordinances create an atmosphere that promotes and encourages growth in this area. Looking at some of his other items of concern, the first area I believe that we need to address is the future of our airport. We need to make the decision to either commit to its viability and fully fund the airport renovation through public investment and all available grants or abandon it. We cannot develop a successful air service by using the band-aid approach. I have heard several presentations from consultants and have had discussions with people in the business community on the importance of a regional airport. If we want to attract and encourage economic growth in the high-tech industry or in industrial manufacturing facilities, we are going to have to provide access to major airport hubs. The old saying is true: “Time is Money.”
Wolverton: Dennis Donovan made several suggestions as to how we can promote our area and make our area more attractive to new employers. Of the suggestions he made, I believe that the most important are as follows:
1. We must provide local incentives to attract employers. Properly designed and applied incentives are good for all involved. We should use caution in trying to attract certain types of industry. I believe we should set parameters on who will be granted incentives. These criteria could be based on number of jobs that will be provided, the amount of capital investment a company will be making, and the pay scale of the jobs that will be generated. If an industry meets the parameters as set forth and is legal, moral and ethical, we grant the incentives. The Boone County Commission should be applauded for authorizing the use of Chapter 100 Bonds. This is clearly a step in the right direction, and we need to continue down this path.
2. We must assemble more large-scale industrial sites. Ultimately, I see this as some sort of public-private partnership, which will allow the sight to be used as an incentive to attract new industry. It would take a major developer with really deep pockets to take on the risk of developing a large-scale industrial area designed to attract another employer like a 3-M or Quaker Oats. However, public funding would help to contain risk and would allow the use of government incentives to entice a major employer to our area.