2020 Has Already Been Rough For Homegrown Companies That 'Set The Character Of Kansas City'
The Kansas City Star’s front page on December 7, 1997, made a big splash about the $500 million construction just starting in the southern metro area.
“Sprint makes history with its headquarters,” the headline read, adding that it was “so big it will have its own ZIP code and power substation."
This week, two more headlines showed that the respective heydays for Sprint and the Star are now history, as Sprint lurches closer to a merger with a competitor and the Star announced the bankruptcy of its parent company.
The first two months of 2020 have not been kind to several homegrown companies, some of which are — or were — among the city's top employers. Russell Stover Chocolates and Hallmark have announced job cuts, with Hallmark employees preparing to say goodbye to 200 to 230 of their “greetings creative” colleagues beginning Monday, according to an internal document obtained by KCUR.
Frank Lenk, director of research services at the Mid-America Regional Council, said it’s concerning that several quintessential Kansas City companies are going through tough times.
“Some of our established companies that really set the character of Kansas City, frankly, have struggled in recent years and are downsizing,” he said. “The restructuring that they are going through could very well lead to somewhat of a rebound or just may mean they are now profitable with a lower level of employment.”
Founded here in 1910 and still run by the family of its founder, J.C. Hall, Hallmark announced last month that it would cut approximately 400 of its 30,000 employees around the world, including those at the company’s Crown Center headquarters. Already, 77 people have agreed to take the “creative voluntary transition program,” the internal document said.
The voluntary and involuntary jobs losses will be completed by the end of this month, said JiaoJiao Shen, a Hallmark spokeswoman, who added that the company “saw positive performance” last year.
“While we have a lot to feel good about, today’s challenging and competitive consumer environment is requiring us to transform our business,” Shen said. “These changes will enable us to invest in new growth strategies that will ultimately help us fulfill our future vision.”
On Tuesday, the company that grew out of railroad communications systems to become one of the top wireless providers in the country cleared one of the final hurdles in its two-year march toward a merger with T-Mobile. Executives hinted that the company would have been sold off or possibly gone bankrupt if not for the $26 billion deal.
The company is now housed in one building of that large Overland Park campus, which was sold to a commercial developer. The deal is expected to be completed by April.
The Kansas City Star
Founded in 1880 as an evening paper by William Rockhill Nelson, The Kansas City Star on Thursday announced that its parent company, McClatchy Co., filed for Chapter 11 bankruptcy protection. McClatchy has labored under a heavy debt load since paying $4.5 billion in 2006 for the Knight Ridder newspaper chain. The Star, with eight Pulitzers to its name, will continue to operate as usual along with McClatchy’s 29 other newspapers.
In its heyday, The Star’s newsroom boasted nearly 300 employees. Today there are 50.
Russell Stover Chocolates
Founded here by Russell and Clara Stover in 1923, Russell Stover Chocolates was acquired by the Swiss company Lindt & Sprungli in 2014.
It announced in January that it would cut 400 U.S. jobs and close some stores and facilities, including one in Butler, about an hour south of Kansas City. The company said it had been consolidating operations with Lindt since 2018.
Old guard fading
As the financial skyline of the city changes, there’s concern about the fading of the old guard, renewed reliance on local tech giants like Cerner and Garmin, and calls for more investment in local start-ups.
Companies like H&R Block, Hallmark and Cerner all have the flavor of Kansas City, said Larry Jacob, a spokesman for the Ewing Marion Kauffman Foundation.
The city needs more of a pipeline for those kinds of companies, Jacob said, and less of an emphasis on the economic development efforts aimed at landing big companies.
“I think you do have to do a balance of both,” Jacob said. “But we've been so overbalanced on just trying to lure companies from someplace else without focusing on what's here. That's been a challenge not just in Kansas City, but with economic development across the nation.”
It could be less of a challenge in Kansas City soon enough. On Wednesday during his State of the City address, Mayor Quinton Lucas proposed a $500,000 cut to the Economic Development Corporation of Kansas City, which works on those incentive packages. Residents can expect a “significant change” to how the city approaches economic development, Lucas told KCUR, with more of an emphasis supporting long-standing local businesses and left-behind neighborhoods.
Both Lenk and Jacob agreed that there needs to be more of a focus on developing local businesses.
“The solution is to really to focus our economic development efforts on growing more of our own,” Lenk said. “We need a deeper bench of up-and-coming companies like the Cerners, like the Garmins that can take the place of those (that are struggling).”
The Kauffman Foundation created “America’s New Business Plan” last year to work with local, state and the federal governments to create policies for new business creation.
Jacob cited a map that shows Kansas City has nearly 200 tech startups. It was created by former Google executive Brian McClendon and his wife, Beth Ellyn McClendon, who is also a Silicon Valley tech veteran.
As the 200-plus workers prepare to leave Hallmark next week, at least one executive had his eye on what they’re leaving behind.
In an email obtained by KCUR, Hallmark’s senior vice president of creative thanked employees who “decided to depart Hallmark under these circumstances.”
“Your work over the years, and your many contributions,” he wrote, “are an important part of Hallmark’s creative legacy.”
KCUR’s Dan Margolies contributed to this report.
Peggy Lowe is a reporter at KCUR and is on Twitter at @peggyllowe.