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Fact Checker: How much of Cedar Rapids’ growth comes from existing businesses?
In a competitive four-way race to be Cedar Rapids’ next mayor, candidates have pitched their visions for strengthening the entrepreneurial ecosystem of Iowa’s second-largest city.
At a Sept. 22 mayoral candidate forum hosted by the Cedar Rapids nonprofit NewBoCo, Women Lead Change Chief Executive Officer Tiffany O’Donnell said she wanted to explore ways to recruit new businesses to the city.
O’Donnell highlighted companies such as Collins Aerospace, Van Meter Inc. and United Fire Group as companies that started here and “continue to be successful and make us who we are today.”
“We know that 80 percent of our growth in Cedar Rapids comes from existing businesses,” O’Donnell said.
On the campaign trail, she has at times criticized the city’s business growth climate — saying it “has come to a halt” in recent years.
Analysis
So, where does that 80 percent figure come from?
O’Donnell pointed to the Cedar Rapids Metro Economic Alliance — an organization that focuses on business support and retention — as her source.
In August 2018, the organization reported that “existing businesses can represent some of the largest growth opportunities. Statistically, 80 percent of a community’s growth comes from existing business projects.”
At that point in 2018, the Economic Alliance reported it had helped four expansion projects with Freund-Vector Corporation, Timberline Manufacturing, World Class Industries and Van Meter. These projects represented a total of 110 new jobs and $32 million in capital investment, according to the Alliance.
Seventeen more projects also were in the pipeline — representing businesses looking to build out at an existing location, create new jobs within a current facility or build a second location in the area, the organization reported. The Alliance that year changed the name of its core function of economic development to Business Retention and Expansion to align with its focus on that growth.
Many of these projects are in the industrial sector, which doesn’t take into account things like new restaurants for instance. Nor does it include all of the residential development in Cedar Rapids, from a mix of local and out-of-state developers.
Since O’Donnell was referring to recruitment of new companies and growth support for existing businesses, the Fact Checker’s review will focus on those projects.
Former Mayor Ron Corbett, the Economic Alliance’s vice president of economic development, said that approximately 80 percent figure “has been pretty consistent for the last five years,” maybe increasing at times depending on what projects are in the works.
According to the Economic Alliance, expansion projects have included:
- Alliant Energy’s logistics solutions subsidiary Travero recently completed Logistics Park Cedar Rapids, a $26 million public warehouse and transload facility — the region’s largest — located in Fairfax.
- Food manufacturer General Mills this year is expanding its factory at 4800 Edgewood Road SW in Cedar Rapids, a $57 million project — up from an initial $37 million.
- JRS Pharma, maker of pharmaceutical excipients or inert ingredients, in 2020 announced a $15.9 million expansion to build a 9,200 square-foot production facility and tank farm at its 725 41st Ave. Drive SW property.
- In 2019, fluid-power products distributor Iowa Fluid Power pursued a $5.7 million expansion of its Blairs Ferry Road NE facility by 45,000 square feet.
- Van Meter, a Cedar Rapids-based distributor of electrical and energy products, in 2018 worked on a $4.7 million, 42,000 square-foot addition to its warehouse and distribution center at 915 32nd Ave. SW
That just names a few of the expansion projects. There are others from companies including FluidQuip, Dupont, Eco Lips, Cargill, Great Western Bank and more, Corbett said.
“Those are all companies that have a presence here and have an expansion,” he said.
The list is “much smaller” for new businesses coming to town, Corbett said. He identified projects including:
- A 200,000-square-foot classified defense aerospace facility worth over $170 million in the works for international aerospace and defense company BAE Systems.
- California-based paint company ColorCoat leased 20,000 square-feet at 551 60th Ave. SW to create 40 jobs and invest $400,000 in Cedar Rapids.
Nationally, the Small Business Administration reported in 2012 that “about 60 percent of the private-sector net new jobs are from existing establishments and about 40 percent from the churn of start-ups minus closures in the last two decades.” Even across the United States, existing businesses are responsible for most growth.
Conclusion
There is somewhat of a disconnect between O’Donnell’s overall campaign message that Cedar Rapids’ growth is grinding to a halt and her acknowledgment that 80 percent of the city’s growth comes from existing businesses. Nationally, that trend is not an anomaly.
Ultimately, the 80 percent figure O’Donnell used is correct, though — existing businesses contribute to most of Cedar Rapids’ growth. We give her an A.
Criteria
The Fact Checker team checks statements made by an Iowa political candidate/officeholder or a national candidate/officeholder about Iowa, or in ads that appear in our market.
Claims must be independently verifiable. We give statements grades from A to F based on accuracy and context.
If you spot a claim you think needs checking, email us at factchecker@thegazette.com.
Members of the Fact Checker team are Erin Jordan, Michaela Ramm and Marissa Payne. This Fact Checker was researched and written by Marissa Payne.
Tiffany O'Donnell speaks at a mayoral candidate forum Sept. 22 hosted by NewBoCo's One Million Cups at the Olympic in Cedar Rapids. The forum focused on entrepreneurship, technology, education and innovation. (Rebecca F. Miller/The Gazette)
