- Funding for Working Capital is provided by the Friends of KTW, the Raven c and Marguerite Gibson Foundation.

And go Topeka Today on Working Capital.

We have the pleasure to have Lieutenant Governor David Tolen with us and we're gonna get down to the nitty gritty of the Kansas economy and how that's growing and how traditionally, you know, we've been a farm centric economy, but really we have specialists and, and a lot of other, a lot of other great attributes here for all sorts of industries.

So, so right off the bat, thank you for being on the show.

- Thanks for having me, Jay.

Glad to be back.

- And, and also I'd like to say thank you for supporting the arts and I, we should probably give you your key back, but I think we're gonna steal your office again in a couple weeks 'cause we have been doing a great LG desk concert series.

So really from you help support across the board, everything from your department, but let's get right to it, Kansas, from where we've been and where we're headed, why, why would an industry want to move to Kansas?

What, what are the, the great points that our state has?

- Well, I'll do the traditional secretary of commerce sales job, but lemme start by saying that not every business would, so if you're making surfboards and you need to test surfboards in the ocean, this is not the right place for you.

If you're in the snowboard business or you make snowmobiles and you need to test that 10 months out of the year, we're not the right place.

But we have built an economic development plan in Kansas, which is based on our strengths.

We know what we're good at.

So you mentioned agriculture as one of our strengths.

We have aviation as well, advanced manufacturing, logistics and distribution.

We have an emerging battery cluster in our state.

So we're really focused on making sure that we execute on growing the economy in the areas where we're already strong going from good to great or even greater - Non-official.

You've been across the state meeting people, how have the, the populace been receptive to new training, new opportunities in these industries when we're talking about, you know, small towns that, you know, their economies that have dwindled over the past couple decades, but now you get a factory close there, it's becoming, the economies are slowly turning around.

You're seeing, seeing that downtown turn around again.

How is that affecting the everyday populace?

- Well, there's no such thing as standing still.

You're either getting better or you're getting worse.

You're gonna fall behind or you can leap forward.

And it's been an adjustment in some parts of our state that have not seen any meaningful economic growth for sometimes a century to suddenly have the, the happy problem of more kids in the classrooms and vacant houses being filled up.

And maybe, you know, I I've gone to a number of towns, particularly in Western Kansas, that have an acute housing shortage from people that have moved from the front range of Colorado into Western Kansas because they've been priced out of Colorado and they wanted to try and build a better life in a lower cost market.

And so you have places that were used to a 30% residential vacancy rate that suddenly you can't find a house.

And so there are are growing pains that come with that, but it's so much better to have growing pains than the pains that come from a, a, a, a receding economy that come from having a company closure or you know, more people moving out.

And that's what in many parts of our state we were used to for a long time.

And so I'm really proud of the fact that we have some happy problems in, in regions of our state that weren't accustomed to growth in the past.

- Yeah, when you hear you do need to have more housing built, that, that is a very good problem to have because there's jobs and opportunities coming that way.

- So that's exactly right.

- Before we get into the the new sectors though, I wanna talk a little bit about our farmers and our farming.

I know with industrial farming, with, with prices, with commodities fluctuating, you know, some farms are going to multi farms families underneath one, one roof.

How, how are we able to help or how is the state able to help those farmers now, especially with tariffs and, and helping those kind of gaps?

'cause I know years ago we had some tariffs that, that came in and for one, one instance, you know, the, the price of pigs went way down and bottomed out and then they found supplies from South America and Japan and it was a hard time for pig farmers to bounce back.

So how do our farmers navigate these waters when they're dealing with these extra tariffs on top of that?

- Well, the, the good news is farmers are tough.

- They're - Used to, - Yes they are - To the, the challenges that come with weather that come with markets that change commodity prices going up and down, inputs going up and down.

And so there's an adversity there, which is very useful, particularly in a time like this where we're having historic pressures on our ag sector.

What we're doing at the state level is a couple things.

Number one, we're doubling down on international trade and making certain that we are doing the work that's required at the state level to get into markets and to take care of the markets that we already have.

So I just recently returned from a trade mission to Asia, was in Japan and Taiwan on that trip.

So Japan bought $600 million worth of Kansas beef last year.

And so that's a key market for us.

Taiwan has recently approved a new purchase of a large amount of Kansas wheat.

And so that's important to our economy and we've got to continue to open up new markets for our producers.

So we know that soybeans China has basically stopped this year buying soybeans from the United States and we've got an awful lot of farmers with great looking beans in the field - Yeah.

- This season that are, you know, worried about who they're gonna sell those to.

We've also got sorghum producers around the state.

So we're, we're number one state for sorghum in the country and some of those markets have dried up as well.

So what we're focused on at Department of Commerce, Kansas Department of Agriculture, secretary Beam and his team is getting on the planes going to countries that may be potential customers for these Kansas Ag products and making the case for why they should be buying from Kansas farmers.

So it's a, it's an ever evolving context that we're in and a lot of it really comes down to that face-to-face work.

And, you know, we don't control tariffs Nope.

At, at the state level of course.

But what we do control is communications at the sub-national level.

So at, at the state level, being able to go and meet with our counterparts in other countries, get introduced to, to buyers in those places, make sure they know our Kansas Ag producers.

That's where we can be helpful.

The second point I would make is that it's important to have more value add opportunities in the states.

So the the third largest economic development deal that's been done in the Kelly Tolin administration is hill mar cheese.

So Hill Mar cheese has built a massive cheese plant in Dodge City - Oh wow.

- And it's about a $670 million investment.

And they, they make cheese for a variety of companies.

And I'm, I'm betting that most people who are watching this right now have hill mar cheese in their refrigerator.

It's just not labeled that way.

So why did Hill Mar cheese choose Kansas?

Couple reasons.

Number one, we had an existing dairy population, number of dairy farms that were within a reasonable proximity to Dodge City so you could get the milk quickly.

The state worked really hard to do the infrastructure it takes to make sure that these big heavy milk trucks can, can get onto the roads from the dairy to the state highway system to the US highway system and onto the plant itself.

That takes a bunch of money.

We committed to doing that and then we've had an aggressive push to make sure that we can increase the number of dairies within southwest Kansas.

And so that's another great example of where we've had dairy investments, which are very, very large.

These are sophisticated operations and they need to do a lot of hiring that's gone into counties around Ford County, which maybe historically hadn't seen a lot of growth.

So Mead County is one example.

We've had Gray County as well where you've seen a lot of good growth and that's all because we focused on value added opportunities.

Amber wave wheat protein facility up in Phillipsburg, another great example.

So that's, that's part of how we can inoculate ourselves to some extent to the, the, the shifting winds at the federal level.

But it's, it's a complicated beast and there are only so many things we can control.

So we're glad we've got close relationships and tough Kansas farmers.

- Well that, starting off with our tough Kansas farmers and you talked about putting in the infrastructure to support those, we wouldn't have our good trade routes, our good logistics here without those farms to start with.

- Right.

- But now the other sectors really benefit from that, whether it's biotech or the aviation industry, all those.

So tell us a little bit how we are uniquely positioned here in the middle of the US logistically to cater to different industries.

I don't like you say not every industry, but if it's something that does fit here, just the the logistics and the, the getting shipments in and out and, and the aggregates and whatnot.

- Yeah, well you know, I mentioned at the beginning that maybe you don't want to have your surf boat surfboard company in Kansas.

Yeah.

Maybe you don't want to have a snowmobile company in Kansas if you need to test in the snow.

But if you're in the aviation sector, you think back to the 1920s when Wichita became the air capital of the world.

The reason for that was we've got good weather most of the year.

You got wide open skies, you could get up there and test your planes.

And that's where we had natural assets that we leverage.

So thinking about ag, the largest concentration of animal health companies in the world is between Manhattan, Kansas and Columbia, Missouri.

And the majority of those are between Manhattan and Kansas City.

- Wow.

- So that's the animal health corridor.

And we have companies that are engaged in pet food, manufacturing, vaccines, you name it all around.

Everything from from dairy cows to phyto Yeah.

At home.

And these are sectors that are critically important to our economy.

And if you think about your, your dog or cat at home, the amount of spending that the average American has done on, on their dog or cat, whether you're talking about taking them to the vet or, or the chewy toys that you buy for them, it's increased dramatically.

And so Kansas is really well positioned there.

We've got not only our, our our ag community, but you think about Kansas State University, where there is world class research that goes on that is the underpinning of so much of this.

So we're really being smart, I think about leveraging our assets and making certain that we take, whether it's the research at K State that has of course value to us as human beings, but we want to take that knowledge and monetize it, figure out how we take it and bring dollars back to Kansas so that there are more opportunities for Kansans.

That's ultimately what economic development is all about.

- It's time for a short break.

When we get back, we're gonna talk about those new jobs for Kansans and what may be on the horizon.

So stick around.

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- Welcome back.

We're Lieutenant Governor David Tolan.

So in today's partisan political climate, how hard is it to really cater and find just democratic jobs to build your economy on?

Because you know, you wanna make sure, I mean, that's the way things are going these days, right?

- Funny one Jay.

So in all seriousness, what I love about economic development is that it's not a red issue or a blue issue or an independent issue.

Most reasonable people can agree that it's a good thing to bring new jobs, higher paying jobs, more investment, new housing, all those things to our state.

And - Finding a place for your surplus for your farmers - Abs.

Yeah, absolutely.

These are, these are positives and you don't have to be a Republican or a Democrat to like that.

It's simply something that's good for people.

And so I have enjoyed so much as Secretary of Commerce getting to focus on these types of issues that largely bring us together.

Now sometimes we fight about the how.

- Yeah.

- You know, there, there are folks that believe or don't believe in public incentives.

What are the right types of incentives and the extent to which quality of life plays into economic development.

These are things that we can debate.

But generally speaking, most people are happy when a new plant is coming to their town when there are more houses coming to their town.

Because ultimately it's good for us now.

And I think most importantly it's good for our kids.

So we for a long time in Kansas have lost our graduating seniors, whether high school, community college, technical college, university and beyond to other markets.

So we spend lots of public dollars educating our kids and then we export them at a loss to Nashville, to Dallas, to Denver.

And that's really not sustainable.

And so it's been a joy for me as Secretary of Commerce to get to focus on how do we create the opportunities that allow us to keep our kids in the state and to not have to take an economic loss by staying in Kansas or by moving back to Kansas.

And I think we've made a meaningful difference in that battle.

- So let's, let's kind of jump around to a few different industrial sectors.

Now.

We've talked about the air capital of the world.

Yeah.

Being Wichita, it's been a little while now, but I they've opened up the supersonic corridor there.

Correct.

- Yeah.

- How is that helping anything in the, in the air industries?

Are we seeing more contracts or more businesses looking towards the future and the possibility of expanding into Kansas even though we have quite a presence there already?

- Well, you know, the being the air capital of the world means that yes, you have the, the, the big names, you've got got Spirit A Systems, you've got Belt Textron, you've got Bombardier, but there are 500 other companies that make up the supply chain.

This ecosystem of companies that supports the, the air capital of the world and, and us maintaining that moniker.

And it also means that you've got NIR, the National Institute for Aviation Research and the National Center for Aviation Training at WSU, which are key partners.

And that you've got other vocational and technical colleges and community colleges that are part of this, this environment that has allowed there to be innovation and manufacturing and research that all together enable us to do big things.

So we don't know necessarily what the, the, the future holds in terms of what the market demand will be like on the commercial side or on the defense side, but we do know we've got all the capabilities to be able to respond.

And that's, that's from research to, to manufacturing and testing all those pieces that are so key and that means opportunity and the opportunity to create wealth for Kansans.

- I keep waiting to hear some big announcement of a, one of the big airliners wanting to come for commercial purposes for the supersonic again, 'cause we haven't seen a concord in the sky for quite some times, but I'm sure, we'll maybe in the future at some point.

But with those big open skies, let's talk alternative energy.

- Yeah.

- How is our state receptive to that and how are we positioned for the future at offering that and getting away from some of the stigmas that are being created around it?

- Yeah, so for over 20 years, Kansas has focused on, again, our assets, one of which is wind.

The wind blows all the time.

We've got lots of land.

And so from a a wind energy perspective, this is a great state to invest in.

And we have done extremely well over the last two decades with, with creating the right recruitment opportunities for companies that are setting up wind farms, working with counties with landowners to have an environment that works.

And then with our utility partners, you gotta have the transmission.

There are all these pieces.

And then having the customers at the end as well.

For a long time we've been shipping much of our power that is generated from good old Kansas wind to other markets.

And so what I'm proud of is that with the $24 billion of private sector investment that's come to the state since Governor Kelly and I took office and 77,000 new and retained jobs, there's a lot more demand here with new customers.

Very, very large customers that are here, buy Kansas Wind and other renewable energy that's sourced here than there was before we took office.

So you think about the energy demands, which are increasing so rapidly in, in our state, in our country, in our world, particularly with ai, the the need for large scale data centers that's gonna require an all of the above approach.

And Governor Kelly and I have always had that approach.

So it's, it's not that you are against any one source of energy or that you're going to entirely focus on just one.

It's about wind, it's about solar, it's about natural gas, it's about clean coal.

Those things together can, it's about nuclear.

- Yeah.

- Whole - Portfolio.

- It's the whole portfolio.

And so we just signed an MOU with a company called Terra Power, which has a new modular reactor technology and they're evaluating three markets for that, one of which is Kansas.

So we, we really have a lot of opportunity right now in our state to harness the natural advantages that we have and use them to create a stronger economy and a higher quality of life for Kansans.

- What do you see on the horizon?

Let's talk a little bit about being a public servant.

You have a, a limited amount of time, so you guys are doing well at growing the economy.

I know there's always stuff that you daydream about.

- Is - There stuff you could see that, that maybe you at least started the seed here, or maybe even not that, but where would you like to see Kansas with all of its good industries head in the future?

- Well, I, I think that the reason we've done as well as we have over the last seven years, we've broken nearly every record for economic development in Kansas history under the Kelly Tolin administration.

That's occurred because we haven't tried to go after pie in the sky, new wild ideas.

We've been very ksan in our approach, which is practical and grounded.

And we look at the facts, we look at the data, we look at our strengths and we build on that.

So I think the way we continue to win is by doing more of the same and by making sure that we have a plan and we stick to that plan.

When the governor and I came into office in 2019, there was a shotgun approach to economic development and we have been much more targeted about making certain that we are executing based on data and executing based on what we can actually get done and not trying to get too far out there.

So I'm sure somebody has a great idea how to land a plane on Pluto.

I don't know.

- Yeah.

- And maybe that will be the thing that, that transforms somebody's economy.

We aren't chasing that kind of thing.

We are being really focused on where we have strengths, what's realistic and being the absolute best and beating all of our competition because we're smarter, we outhustle them and we know we've gotta be more creative.

- Okay.

So we've had some big developments in the economy in the past few years.

Panasonic, I mean there's quite a few international companies who are now investing in Kansas and investing in our people.

How do you find those new companies overseas and show them that we really are tops in what we go after?

- Honestly, it's, there's no secret sauce to this.

It is just good old fashioned shoe leather.

It's the basic blocking and tackling of economic development, which is knowing what your assets are getting in front of companies in a way that is meaningful to that company.

So often that that means you've gotta get on the plane and go to where they are, whether they're in Berlin or whether they're in Connecticut or if they're in Osaka, Japan.

And making the case for why what that company needs in order to grow is best found in Kansas.

And so we have spent an inordinate amount of time on making certain that we get to these markets and that we have a presence in those markets.

So Kansas does our domestic business recruitment differently than most states.

We have a person who is based on the East coast, one on the west coast, one in Chicago for the Great Lakes region.

And they pay face-to-face visits to company CEOs, to site consultants and they can be there in, in a day or less if somebody calls.

That's a huge advantage for us and I think it's a key part of why we've won.

But it's also meant for us opening up offices where Kansas used to have a presence prior to the Brownback administration in markets like Japan where we have had tremendous success on both the foreign direct investment and the trade side and then in Germany.

And so we have representatives who are there to meet with the companies and these, these are Germans in Germany, these are Japanese people in Japan and they, they represent Kansas.

They are our boots on the ground and it's made a huge difference for us.

But it also means that I do three or four trade missions a year.

Governor Kelly does three or four international trade missions a year.

Secretary Beam is on planes all the time with his team.

It is a, a very busy travel schedule for all of us, but it's paid off - And you can't overlook that face-to-face that that handshake, especially when you look at Eastern versus western business.

Also, you know, it is a lot more family oriented when you get to Japan and China and the, and the Asian economies compared to even ours in Europe.

But I would love to hear how, you know, 'cause we have the wagu beef here from Japan.

I would love to hear how they market our Kansas beef, but that's probably for another show.

Thank you for stopping in.

Thank you for really showing us how bright our economy is and how bright a future Kansans have.

And I'm glad you're looking towards keeping really our, our brain trust here.

So - Thank you Jay.

- Keep up the great work.

Thank you very much.

So thanks for watching Working Capital.

We hope to see you next time.

To catch up on previous episodes of Working Capital scan the QR code with your phone or go to www.watch.kw.org.

Funding for working capital is provided by the friends of KTW, the Raven C and Marguerite Gibson Foundation.

And go Topeka.