Headquartered in the Heartland | Global Trade Magazine
State Spotlight
  September 28th, 2012 | Written by

Headquartered in the Heartland

The Port-to-Plains Region is Wide Open for Global Business

East and west coasters might pigeonhole the nine states of the Great Plains as flyover country, with John Steinbeck’s Grapes of Wrath-type dust storms sweeping through desiccated ghost towns. If so, they would be out of step with the heartland’s reality. The area’s trade and manufacturing revival is anchored in agriculture, energy and high tech. Spanning more than 2,000 miles from north to south, the Plains region includes North Dakota, South Dakota, Montana, Wyoming, Colorado, Texas, Oklahoma, New Mexico and Nebraska.

The Ports-to-Plains Alliance (www.portstoplains.com), a Lubbock, Texas-based consortium of government officials, business people and community leaders, succinctly describes the area’s current place in America: “Quite simply, we find, produce, process, transport and deliver the food and fuel upon which the quality of America’s cities depends.”

Economic Healing Roger Sessions relocated Ferris Mfg. Corp. to Texas for its business climate, and built a new $5.5 million headquarters. Single-handedly.

Great Plains states’ manufacturing grew from 19 to 21 percent of the nation’s output in the last five years, leading its business-friendly climate to attract Ferris Mfg. Corp., a privately owned developer and manufacturer of innovative wound care products with $20 million in annual revenues. When Ferris’ top officers narrowed the choice of relocation sites to Virginia, Florida, Indiana, New Mexico and Texas, a $450,000 grant through the Texas Enterprise Fund helped seal the deal for Ferris’ relocation from Chicago to Fort Worth, where the company built its $5.5 million headquarters.

Roger Sessions, Ferris’ physician-turned-chief executive officer, had tired of Illinois’ “poor business climate, especially the high taxes.” He chose Fort Worth because “it was a large metroplex like Chicago, but commuting time is only 15 minutes here versus one hour for most of our employees in Chicago.” Sessions says employees also liked Texas’ educational system, particularly its top high schools and colleges. About 25 of the company’s 50 employees relocated from Chicago, and new hires are expected to bring the full complement to 100 within the year.

Sessions was impressed with the area’s pool of healthcare professionals, whom he describes as “well-trained, energetic and motivated to work.” Because Texas has no state income tax, Ferris was able to give its employees raises three months earlier than usual, with an additional five percent bonus.

Transportation infrastructure was another important consideration in the company’s decision. It exports to Israel, Australia, Malaysia, South America and Mexico. Sessions   deems Dallas-Fort Worth-Arlington’s rail and air infrastructure “excellent.” Summing up his feelings of his company’s Great Plains relocation, Sessions says, “Texas is friendly to business. Taxes in Illinois grew prohibitive for us so we relocated. If everyone leaves Illinois because of high taxes, someone has to be there to turn out the lights, and it wasn’t going to be me.”

 

Old and New

The Great Plains remains an agricultural heartland, with ranches covering more than 500 million acres. Farmers have profited from rising prices in wheat, corn and soybeans. From 2007 to 2012, commodity shipments increased from 20 to 25 percent of the nation’s output, which totaled $44.3 billion in 2010.

A crucial part of the economic rebound has been agricultural exports, particularly wheat.  As the world’s largest wheat exporter, the U.S. ships the commodity to more than 100 countries. In the Asia Pacific Economic Cooperation (APEC) countries alone, U.S. growers sold $4.1 billion worth of wheat from 2010 to 2011. To continue that export boom, trade groups support the Trans-Pacific Partnership, which has Japan, the Philippines and Indonesia currently contemplating membership.

But energy, pumping $2 billion each month into the Plains region, is the area’s big story, especially the Bakken Shale oil field. Stretching from Canada to Texas, the Bakken field has an estimated four billion barrels of oil reserves, the world’s largest oil discovery in the last 40 years (http://oilshalegas.com/bakkenshale.html).

Jeremy Vannatta, the Big Sky Economic Development Authority’s director of business outreach, recruitment and marketing, says that the eastern half of Montana, which includes part of the Bakken field’s Williston Basin and Three Forks area, is booming.

Bakken Business With an estimated four billion barrels of oil reserves, the Bakken Shale oil field represent the world’s largest oil discovery in 40 years

“There’s always been oil here, but since 2009 there’s been a boom because of fracking,” Vannatta says. “We need everything here because of the huge influx of between 80,000 to 100,000 people. We’re building infrastructure fast, including movable apartment buildings for crew camps and new hospitals. This activity generates a huge number of new jobs.”

Oil wealth virtually covers the Great Plains. Continental Resources, headquartered in Oklahoma City, is among the top 10 U.S. petroleum liquids producers and the largest leaseholder in the Bakken field. Its total 2011 revenues were $1.6 billion and it’s on track to triple production and proven reserves from 2009 to 2014. Continental expects in year three of a five-year plan to triple the company’s size and produce the oil equivalent of 120,000 barrels daily, after hitting 100,000 barrels for the first time in June 2012. Employment jumped from 485 in 2009 to more than 700 in 2012, and Continental continues to hire with all cylinders firing.

John Hart, the firm’s senior vice president, treasurer and chief financial officer, has seen the company grow so much in the past few years that it relocated from Enid, Oklahoma, a smallish city of 50,000 that had been its headquarters for more than 40 years. “Due to the growth of our company we needed to be in a metropolitan area, nearer to a major airport and attractive to talent,” Hart says. “We hire lots of engineers, geologists, lawyers, accountants and more, spread out over 15 states. Of that number, roughly 400 are in headquarters, with 300 in the field plus service contractors to help run the oil rigs and support the administrative staff.” A long-time Sooner, Hart sums up the region’s place in America: “The Great Plains has always had a strong presence based on agriculture and energy. But the Bakken field is of a size and scale never seen before. It’s a multi-decade asset.”

Agricultural sales and gushing oil have created an economic climate that encourages companies like Ferris Mfg. Corp. and Continental Resources to make the Great Plains their home. That gives state budgeters the luxury of investing in better transportation infrastructure, university-related research centers and all kinds of quality of life amenities—from opera houses to riverfront walks and jazzy microplexes and metroplexes complete with cafes, boutique hotels and art galleries that attract well-educated young talent in droves.

From Oklahoma City’s $54 million transformation of a dry riverbed into a seven-mile long waterway used as an official Olympic rowing training site, to Littleton, Colorado-based Lockheed Martin’s Space System heat shield that protected Mars Curiosity Rover’s descent after its 352 million mile journey, the region’s economic ascent is clear and  further reflected by its overall population growth of 14 percent (versus nine percent nationally) from 2000 to 2010.

There’s even a silver lining to the sparsely populated Great Plains states’ vast swaths of unoccupied land. That open space swayed Washington, D.C.-based Pegasus Global Holdings to choose Hobbs, New Mexico, to build a 15-square-mile ghost town for its Center for Innovation, Testing and Evaluation (CITE). Pegasus will test products like driverless cars and intelligent washing machines in a simulated medium-sized American city with urban, suburban and rural areas—but no people. CITE is expected to cost $1 billion, create 350 new direct jobs, 3,500 indirect jobs and dozens of commercially sound technological innovations fit to compete in the global economy.

 

Moving Muscle

Great Plains’ government officials have labored mightily to make the heartland a major U.S. trading region, now generating $166.7 billion, or 20 percent of total U.S.-North American trade. The region already has six major border-crossing points to Canada and Mexico, a total bound to increase as politicians continue to beef up the Ports-to-Plains Trade Corridor, a nine-state 2,333-mile swath of highways moving 14 percent of America’s total GDP ($1.7 billion) and 38.5 million travelers annually.

As highway infrastructure improves in this corridor, Texas to Alberta will become an even stronger backbone of North America’s energy production. David Berzina, executive vice president of Dallas-Fort Worth’s Economic Development Authority, points out that major interstate improvements such as those made to I-20, I-30, I-35 (running east-west) and I-81 (north-south) already facilitate trade.

“Railway is another way to go,” says Berzina. “BSNF headquarters are here, and we’re assisting them in expanding.” President Obama’s opposition to the Keystone XL pipeline has also boosted rail for oil transport. For example, workers at the Lashburn, Saskatchewan, loading terminal pump oil from tanks into railcars. Loading up to 15,000 barrels per day, they travel to U.S. markets.

The Great Plains’ growth engine is chugging along, thanks to bountiful natural resources, legislators who understand that a business-friendly economic climate attracts rather than destroys jobs, and a long-term commitment to improving all major forms of transportation infrastructure to boost trade.

 

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