Animal health sector helps St. Joseph diversity, keep growing

The economy of this Missouri River town of 77,000 has long depended on farm animals. At the dawn of the 20th century, the St. Joe stockyard rivaled that of Kansas City. At one time, three major packers — Armour, Seitz and Swift — operated plants there.

Now, St. Joseph also is drawing economic strength from its role in the animal health corridor that stretches from Columbia, Mo., to Manhattan, Kan. Several companies in the sector have moved or expanded here, helping diversify the city’s business mix and increasing employment even during the recession.

St. Joseph’s economy is just Missouri’s seventh largest, and it’s overshadowed in the region by Kansas City. But St. Joseph officials see their proximity to Kansas City as a plus — many residents from Clay and Platte counties drive daily to jobs in St. Joseph — and its combination of old and new agricultural businesses gave it the higheset growth in economic output of any Missouri city between 2010 and 2012.

Historically, the advent of refrigerated trucking and other factors caused Kansas City’s stockyard and packers to vanish and St. Joseph’s to wither, The city’s population hit an all time-high of 100,000 in 1900 and then dropped to 77,000 by 1910, where it has more or less stayed ever since.

St. Joseph still has a few livestock pens, and a large hog-processing plant, Triumph Foods. Triumph is the town’s second-largest private employer, behind Heartland Health/Mosaic Life, which runs the area’s big hospital, Heartland Regional Medical Center.

The prime example of its 21st century concentration on animal health is St. Joseph’s third-largest private employer, Boehringer Ingelheim Vetmedica Inc.

In late August, Boehringer Ingelheim held a grand opening for its new global packaging and distribution warehouse for vaccines and other drugs produced in its nearby factory. Boehringer Ingelheim makes products for treating both farm and companion animals. The building cost $28.7 million and added 25 new jobs, bringing Boehringer Ingelheim’s total employment to more than 900. That’s up from about 600 a few years ago.

The building is the size of 4.5 American football fields or, as Albrecht Kissel, Boehringer Ingelheim’s German-born president and CEO put it, “three and a half real football fields.”

The company got some financial incentives from the state of Missouri to build the building on what was once a farm field east of Interstate 29. But Kissel and his predecessor, George Heidgerken, said that was not the primary reason for choosing St. Joseph over the company’s Fort Dodge, Iowa, site for the expansion.

“The economic incentives were the same in Iowa,” Heidgerken said. “That’s pretty much standard. The decision was ultimately based on the community.

“We wanted to work with a community that would work with us,” he added. “It’s a nice environment for families to choose to live and grow. The school system is good. And we were heard; we were listened to. We had a number of dialogues about our expectations. We worked with Missouri Western State University to build a number of programs.

“The state created the financial tools. But more than anything else, it was the willingness of St. Joseph and the area to work with us. It’s really because it’s a place our employees wanted to live.”

If St. Joseph’s growth has, in some ways, been hindered by its proximity to the Kansas City metro area — it’s about as close to Kansas City International Airport as is Olathe — Kissel said Boehringer Ingelheim sees it as a plus. Some employees live in the northern part of Kansas City and commute along I-29 each workday.

“The proximity of St. Joseph to the Kansas City area helps St. Joseph a lot,” Kissel said. “We can offer employees a huge variety of lifestyles, from the big city to a small town and from suburban to rural life.”

Heidgerken said St. Joseph’s place in the animal health corridor played a role, too, in that it gives Boehringer Ingelheim a talent pool from which to draw.

“The Kansas City Area Development Council was instrumental in helping us and the whole industry,” he said. Kissel sits on the council’s board of directors.

St. Joseph City Council member Pat Jones was one of the dignitaries on hand for the grand opening of the warehouse, and she smiled broadly when asked what it meant for the town.

“It’s a big boost to our economy,” she said. “These are good-paying jobs, and that’s saying something today. We’ve got a lot of fast-food places, but these are the jobs we want.”

Signs of progress

Officials of St. Joseph’s Chamber of Commerce like to cite figures showing the city unemployment rate as consistently about a point lower than the state as a whole. It has fluctuated between 5 and 6 percent for most of the past two years. St. Joseph is alone among the state’s metro areas with steady employment growth since 1977, even growing 1 percent during the recession years of 2006-2011.

At nearly 27 percent, manufacturing makes up a bigger share of St. Joseph’s economic output than in any other Missouri metro area, with the Joplin area and the Leggett & Platt furniture plant in Carthage second at nearly 23 percent, according to the U.S. Bureau of Economic Analysis.

Other important sectors for St. Joseph are financial services, at nearly 9 percent, and education and health services at nearly 10 percent. The city’s top employer, Heartland Health/Mosaic LifeCare, has grown substantially since it started 30 years ago, and in 2012 became a partner in the Mayo Clinic Care Network, whose members can get advice from Mayo physicians.

That’s not to say everything is great. The 2010 Census data shows St. Joseph with 18.4 percent of its population living at or below the poverty level, as compared to 15 percent statewide.

Don Evans has been in real estate since 1999, and he describes his Evans Realty group as the area’s largest independent, non-franchised company. It handles both residential and commercial business.

He called St. Joe’s real estate market “fragile.”

“It’s been a slow, gradual, uphill climb — like a turtle — out of the hole of the recession,” Evans said. “The price of real estate is really flat. It took a dive as of Jan. 1, 2008, and was in a strong nosedive until the end of 2009. Our values were down 33 percent across the board. People who bought a house in ’06 have taken a 30 percent hit and probably gained back 5 percent.”

Still, Evans sees signs of progress.

“Companies are expanding,” he said. “There is a lot of talk of companies moving here, and a lot of it has to do with animal health. We’ve got a strong foothold there, and it’s starting to pay dividends.”

Even downtown St. Joe, with its supply of older buildings, is turning around, Evans said.

“Occupancy rates are 80 percent, which is pretty good,” he said.

He cited the recent move by Heartland/Mosaic to buy the old German American Bank building downtown and move 200 employees there from a leased building on the edge of town as a positive.

Slow and steady

Chamber President and CEO Patt Lilly, in his 24 years in St. Joseph, has worked for the city itself, Triumph Foods and now the chamber, so he has a good perspective on the ups and downs of the local economy.

He spoke at Boehringer Ingelheim’s warehouse grand opening. He’s seen the closure of manufacturing plants such as Quaker Oats (2000, taking 600 jobs) and the Mead Westvaco paper plant, also known as Westab (2004, taking 400 jobs) and the rise of the animal health corridor.

ConAgra closed its Montfort (formerly Swift) pork packinghouse in 1993, but Triumph Foods opened its in 2006 on the same site and now employs 2,700 people — nearly three times the number who lost their jobs with Montfort. Lifeline Foods now employs about 130 people on the site of the old Quaker Oats cereal plant, producing corn products for food and fuel.

“St. Joseph, like many older communities, went through a downturn in the 1960s through the 1980s,” Lilly said. “In the process, we began to get a more diversified economy. We already had important ag industries, going back to the stockyards and packer days. The company that was the precursor to Boehringer Ingelheim, Anchor Serum, grew out of that by developing a serum for hog cholera.

“Today you have some fairly well-known manufacturers. Johnson Controls makes batteries, for instance. But the ag cluster is probably the most important, led by Boehringer Ingelheim. In 2013, Bayer purchased a company called Teva Animal Health that was founded here in 1990 as Phoenix Scientific. It makes generic prescription drugs for animals. Then there is Ameri-Pac, which is a spinoff from Boehringer Ingelheim and makes pharmaceuticals. There are some distribution companies, like Clipper, AgriLabs and Vedco.

“There is a real cluster of strong animal-health-related companies, which is not to discount others like AGP, which is a soybean processor; Hillshire Brands, which makes lunch meat; Triumph in pork and Albaugh and Omnium, which are on the chemical side. Another is Becker Underwood, which is part of BASF and makes seed treatments.”

Lilly said the growth of the ag sector helped St. Joseph weather the Great Recession better than some other metro areas.

“There was a lot of impact on automobile and other manufacturers,” Lilly said, “but ag continued to move right along. Boehringer Ingelheim and Triumph added jobs during that period. We never did see any real significant job loss in that period, and part of that is due to the substantial ag export market.”

The export factor could be seen on tours of Boehringer Ingelheim’s new warehouse. Row upon row of pallets were filled with boxes of vaccines and other treatments and labeled with their destinations: Argentina, China, Vietnam, South Africa and other.

“Not only did we add jobs, but there was significant capital investment during the recession period — $180 million in between new production and headquarters facilities,” said Brad Lau, the St. Joseph Chamber’s vice president for economic development.

Lilly added” “We see continued growth, slow and steady. It’s not sexy, but it really helped us during the recessionary period.”

This story was originally published September 29, 2014 at 11:23 PM with the headline "Animal health sector helps St. Joseph diversity, keep growing."