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NOVEMBER 2006

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KANSAS SPOTLIGHT


Wayne Young

Firms Finding Cost Savings

   When asked what might be keeping more corporate site selectors from choosing Kansas, Young replies: "It's just past image – kind of the cowtown image that we are trying to fight. It is the old image that we don't have the resources here. The reality is that we do have the people, the technologies, the infrastructure and the resources to support companies. Kansas State, Kansas University and the University of Missouri at Kansas City all have programs that produce very highly technical graduates."
   Steve Kelly, director of business development for the Kansas Department of Commerce, says the state is trying to overcome its image problem. "We don't have a bad image," he said. "We have either an antiquated image or no image, but there is no differentiation between one state and the other in the central part of the U.S. We are working hard to get consultants into Kansas for major events. Once they get here, they are amazed at what they see. A large part of the selling is done by what they see once they get here. We are a well- kept secret."
   Kelly said it's important for business executives to know the cost savings they can achieve by locating a plant in Kansas. Economy.com places Kansas in the lowest 20 percent of U.S. states in cost of doing business. In terms of workers compensation rates, Kansas ranks among the lowest 20 percent. Chicago- based Pollina Corporate Real Estate Inc. recently ranked Kansas one of the 10 best pro- business states in America.
   While the image question lingers, Kelly notes, high- tech companies aren't finding any barriers to entry. 1&1 Internet Inc., a U.S. subsidiary of a German- based Web- hosting company, announced Sept. 1 that it would open a new, fully automated data center in Lenexa.
   The company selected a 55,000- sq.- ft. (5,110- sq.- m.) facility at College Crossing Business Park, where the firm will supply space for 40,000 servers and employ 15 workers. The $9- million data center is set to open in early 2007. Lenexa beat out nine other sites across the U.S. to land the project.
   "1&1 has found an excellent business climate in Kansas, and we have been enthusiastically welcomed to the Kansas City area," said Andreas Gauger, chairman of 1&1 Internet.
   "We helped them on a couple of fronts," said Kelly. "The lead came into the Kansas City Area Economic Development Council as an inquiry to their Web site. Part of the logic for this project was the low cost structure here, especially when compared to other markets. A data center represents a very large investment in machinery and equipment, and the tax incentive on this had to be a major consideration."
   There is growing evidence that the Kansas economy is picking up steam. According to the Kansas Business Conditions Index report that came out Sept. 1, the state index reached 68.2 in August, well above the mark of 50 that indicates an expanding economy.
   According to the Kansas Governor's Office, Kansas has seen job growth in 24 of the past 26 months, and the jobless rate is at or near the lowest it's been since December of 2001. In August, Kansas registered an unemployment rate of 4.8 percent.
   High- tech growth continues to fuel the Kansas jobs recovery. IdentiGEN, a leading provider of DNA- based products for the agriculture and food industries in Europe, announced recently that it will form a new U.S. subsidiary in Lawrence.
   The new entity will focus on the North American commercialization of Ireland- based IdentiGEN's TraceBack DNA tracking system. The U.S. operation will start with about a dozen employees and will grow proportionately to the success the firm expects to achieve in the U.S.

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