Mayor Quinton Lucas says he’s bullish about Cerner’s future in Kansas City post merger
After speaking with executives at Cerner Corp. on Monday, Kansas City Mayor Quinton Lucas said he’s bullish on the company’s future in Kansas City following its acquisition by global software firm Oracle.
The mayor spoke with Cerner CEO David Feinberg and Bill Zollars, chairman of the Cerner board, hours after the merger was announced.
“I have optimism,” he said after the call. “I leave today with excitement, rather than grave concern.”
Oracle on Monday announced it would acquire Cerner in an all-cash deal valued at $28.3 billion. In Kansas City, the news raised questions about the future of Cerner. Three founders began the firm in 1979, and it’s since grown into a global health care IT firm and the largest private employer in the Kansas City area.
While mergers often result in job cuts as companies look to realize cost savings, Lucas said the merger may bring new job growth to Kansas City. He said Cerner’s talent in Kansas City will play a central role as Oracle looks to build out a larger health care division within its business.
“Anytime you see change there are reasons to ask questions,” the mayor said. “At least thus far, I am excited about what I’ve heard from Oracle. I am excited about my conversation with Mr Feinberg.”
The mayor said he’s hopeful that the news could portend “a new day, a shining day for Kansas City’s future.”
Oracle hasn’t said what it plans for Cerner’s global workforce of some 28,000. In its news release, the firm said it “intends to maintain and grow Cerner’s community presence, including in the Kansas City area.” Cerner currently employs about 13,000 people locally.
Lucas said he will push Oracle to grow its workforce in Kansas City. He noted that the tech giant recently moved from Silicon Valley to Austin, Texas, which he noted is a much more expensive city than Kansas City.
Officials with Oracle and Cerner did not respond to requests for comment on Monday.
The mayor said he spoke to Cerner leaders about the company’s real estate footprint in the region. The company recently listed three properties for sale, including its 2013-era office campus in Wyandotte County. That leaves its North Kansas City headquarters and the Innovations Campus off Bannister Road in south Kansas City as primary workplaces for local Cerner employees.
The company has struggled to meet original goals it laid out when proposing its Innovations Campus, which was pledged to bring as many as 16,000 jobs and 4.7 million square feet to the campus.
While Lucas said he will work hard to retain Cerner jobs, that so far doesn’t mean any new incentives.
Both the state and city have already awarded “substantial incentives” to build and expand in Kansas City, he said.
In 2013, the Kansas City Council awarded $1.63 billion in tax increment financing, an incentive program that diverts tax revenues back to developers. The 23-year deal was the nation’s largest TIF award, according to Good Jobs First. The company would only receive that amount of reimbursement if it were to build out the entire multi-phase campus as originally planned, officials said.
“Long before we talk about any incentives, let’s talk about alignment we already have. Let’s talk about the rollout that I think we have given to them in North Kansas City and in Kansas City proper,” Lucas said. “I would expect us to have more of those conversations before anybody’s talking about new incentives or any of those things.
“That has not been a discussion. I don’t expect that to be a discussion.”
More broadly, the mayor said he isn’t too concerned about the recent spate of mergers and acquisitions affecting Kansas City area firms. Those include T-Mobile’s purchase of Sprint Corp. and the sale of the Kansas City Southern railroad to Canadian Pacific. He said the region boasts a strong and diverse business climate.
“So long as folks are opening businesses, encouraging business growth, and doing those sorts of things that get the attention of global firms like Cerner has done over the years … then you know what, I’m pretty happy with where we are in Kansas City,” he said, “and I don’t think we necessarily need to ring the alarm bells.”
Every city sees its business climate change over time, he said, as companies and industries evolve.
“I think it’s most important to ask, ‘how are we building the next Cerner? How are we building more opportunity?’” he said. “You know, 50 years ago, Cerner didn’t exist.”
