How Kansas City's Auto-Related Businesses Contribute Billions To The Region's Economy | KCUR

How Kansas City's Auto-Related Businesses Contribute Billions To The Region's Economy

Feb 12, 2019

A few miles away from the Ford plant in Claycomo, Missouri, the assembly line at Knapheide Manufacturing Co. starts at the back door, where six brand-new white Ford Transit cargo vans are lined up, ready to snake through the line for their finishing touches.

Introduced in the U.S. in 2013, Transits have been popular, with an 8.2 percent increase in sales last year.

The activity at Knapheide demonstrates how companies connected to the auto industry contributed $12.3 billion to the economy of the 18-county region in 2017 (the last year for which statistics are available). That economic impact stretches far beyond just Ford and GM to include 96 companies and 15,805 jobs, according to the Kansas City Area Development Council.

At Knapheide, workers are doing what’s called upfitting, adding bed liners, shelving, reflective decals, GPS devices, tool boxes, ladder racks, anything a client company wants.

These upfitted trucks are easy to spot on the street – they’re part of fleets often used by cable companies, delivery services or utilities.

Mike Muller, Knapheide’s general manager, said his company’s specialty is a "work-ready mobile office," whether that's in a Transit or the other vehicle Ford makes in Kansas City, the popular F-150 pickup truck. Business is booming, Muller said, thanks to new attention to repairing U.S. infrastructure.

"We're able to build those service vehicles for the individuals that are creating and building, essentially, America," he said.

The end result is what's on the streets above ground, but Knapheide’s assembly line is 150 feet below ground, in Kansas City's enormous industrial cave known as SubTropolis north of downtown. Owned by Hunt Midwest, the caves are enormous -- as large as 42 football fields.

SubTropolis, owned by Hunt Midwest, is a company that leases space 150 feet underground. Created after limestone mining, the caves are as large as 42 football fields.
Credit Peggy Lowe / KCUR 89.3

"Every building has its own parking, every building has its own loading dock, so this is like a city under the city," said Michael Bell, Hunt Midwest vice president.  

Every day, 2,000 people work at the 55 companies that lease space in SubTropolis and above ground, at what’s called Hunt Midwest Business Center, Bell said.

The fastest-growing companies leasing space here in the last five years are connected to the auto industry, he said, thanks to Ford's Claycomo plant and the General Motors factory in Kansas City, Kansas.

Seventeen companies, including Knapheide, Adrian Steel, another upfitter, and Ford's North American vehicle logistics staging facility, are connected to what's been dubbed Automotive Alley, companies renting from Hunt Midwest that serve the auto industry both below ground in SubTropolis and above ground at the business center.

Although both Ford and GM have recently announced plans to restructure, cutting jobs and closing plants both in the U.S. and elsewhere, the companies are doing well in Kansas City.

In addition to the Transit's popularity, Ford’s F-150 is the best-selling pickup in the United States.

For GM, however, the news is more mixed. Sales of sedans are on the skids nationally, and GM makes Chevy Malibus in Kansas City. The Kansas City Business Journal reports that 2018 sales of Malibus were down 36.6 percent from 2016; meanwhile, GM began building the Cadillac XT4 here, and sales began last year.

Yet Chevrolet is still hopeful about Malibu sales. Steve Majoros, marketing director for Chevrolet cars and crossover SUVs, told Bloomberg that the company ended production of large Impalas because buyers were more attracted to SUVs. But there are, he said, "value-based reasons" for buying Malibus.

A worker at Adrian Steel, another upfitter in Hunt Midwest's 'Automotive Alley' that is located above ground.
Credit Peggy Lowe / KCUR 89.3

Marc Jackson, general manager of Adrian Steel, says people are often surprised to hear that there's an automotive hub in Kansas City.

"When I talk to people about what we do they're intrigued," said Jackson, who is originally from Michigan. "They wouldn't have put that together." 

Kansas City is an example of how automotive plants become magnets for other companies, said Mark Wakefield, managing director in Detroit with AlixPartners, a global consulting company.

But the larger economic benefit all depends on what kind of vehicle is being made, Wakefield said, and pickups and SUVs are the most popular vehicles.

"If you can get that big car plant to go in – and actually hopefully a pickup truck plant or SUV plant – that's a one-time shot and then you get all of this surrounding multiplier effects," he said.

A  version of this story originally aired on Marketplace.

Peggy Lowe is a reporter based at KCUR, covering business stories for Marketplace and investigative pieces for APM Reports. She's on Twitter @peggyllowe.