Can Kemin help revive Des Moines' floundering agribusiness park?

Usually, empty desks indicate a company is struggling.

At Kemin Industries, it's a sign the family-owned business sees no end in sight to its recent, rapid growth.

That's why the company, which taps oregano, rosemary, spearmint and other plants to help make people and animals healthier, has built enough space to grow its workforce by 25 percent.

With $635 million in net sales last year, the company has nearly tripled its revenue over the past decade — and this year's sales have already beat last year's, based on the company's projections through July.

"The worst thing we could do is open a new building and already be out of space," says Jennifer DuCray, a Kemin animal nutrition and health product manager during a recent tour.

The homegrown business' five-year, $125.5 million expansion makes it a star in Des Moines' agribusiness industrial park development that, by several accounts, has floundered.

In 2001, the city unveiled an ambitious plan to attract 5,600 jobs and $420 million of investment to 1,100 acres near downtown Des Moines.

Weighing down the city's efforts: The Great Recession halted most development, the city lost its power to relocate existing businesses, and new flood requirements make financing more complicated for companies interested in the park.

"It's taken awhile, but I believe we're beginning to see some action down there," said Christine Hensley, a Des Moines City Council member who points to Kemin and other businesses' growth. "It's ripe and ready."

The city — and region — have a lot riding on the agribusiness park's development.

Economic development leaders announced a multimillion-dollar effort three years ago, called the Cultivation Corridor, to build on central Iowa's agriculture and biotechnology expertise.

One of the strongest endorsements for the region is Kemin's expansion, says Brent Willett, executive director of the Iowa Cultivation Corridor.

A global force, Kemin Industries "raises the profile of the park, the city and region as a place for investment," Willett said. "It has that kind of cachet."

Demand for natural products aids in Kemin's growth

Founded in 1961, Kemin Industries makes material that mostly goes inside other products.

It might be probiotics in feed that chickens, cattle or pigs eat. Or it's nutrients that help improve humans' eyesight and memory. Or it's antioxidants that help keep people and pet food fresh and safe.

Many of Kemin's products come from plants that most of us are familiar with — marigolds, oregano, spearmint, rosemary and potatoes.

Helping to drive Kemin's sales: Consumers want to know more about what's in their food and are demanding more natural products.

"If I go back 15 years, only about 5 to 10 percent of Kemin's products were natural — or the active ingredients were derived from natural sources," said Chris Nelson, Kemin's CEO and president. "Today, it's closer to 40 percent."

Nelson points to oregano as an example. It's essential to good pizza. But it also can improve animals' gut health, an alternative for antibiotics needed to help aid growth.

"Plants have the ability to make a whole series of chemicals that we cannot make through synthetic organic chemistry, at least inexpensively enough," he said. "Plants offer that pathway."

Kemin plants, although commonly known, are bred to provide certain traits, Nelson said.

So even though Kemin has a large experimental farm near Kelly, most of its specialty crops are grown outside the state.

Kemin's rosemary, for example, would grow well in Iowa in the summer. But it wouldn't survive Iowa winters since it needs the temperature to stay above 20 degrees Fahrenheit.

"We all know it gets colder than that in Iowa," Nelson said.

Kemin grows it rosemary in the southwest United States; its marigolds in India; oregano in Texas.

"Unfortunately, many of the plants that we grow have specific requirements that mean we can't grow them here," he said.

Law change, flood risk hamper business park plans

Kemin — along with food and agriculture conglomerate Cargill; Heska's Diamond Animal Health; and chemical maker Helena Industries — anchors the Agrimergent Technology Park, the city's aggressive plan to develop 1,100 acres on its southeast side.

The first high-profile project proposed for the park was a $300 million ethanol plant that backers pulled the plug on in 2008 after two years of delays.

Since then, the city's hit some major roadblocks in developing the park, a plan that required relocating at least five salvage yards.

In 2006, Iowa lawmakers tightened governments' ability to push private property owners to sell land for business development.

"It was a big tool for us," said Rita Conner, a city economic development coordinator.

"We had these salvage yards that weren't going anywhere," Conner said. "It meant we could never acquire the full 1,100 acres within the park footprint."

The city owns about 130 acres in the park that can be used for development. But it is still interested in buying about 200 acres, a move that could cost up to an estimated $20 million.

The success depends on striking deals with owners willing to sell or relocate their businesses.

And a new federal flood remapping effort that requires the city's levees to meet new height standards places development restrictions on some land in the park.

It also could require several downtown property owners to purchase costly federal flood insurance.

"That started to have an effect on marketing property in the southeast ag park," which runs along the Des Moines River, Conner said. "We ended up with a giant pause button on the types of businesses we thought we could attract.

"We couldn't tell people they were flood-protected 100 percent, and that made a difference in their comfort level and ability to get financing," she said.

The U.S. Army's Corps of Engineers is reviewing a city proposal to improve the levee system. Des Moines snagged about $100 million through a state grant for the effort.

In recent years, the city has focused on helping existing businesses grow, instead of looking to big outside businesses to locate in the park, Conner said.

"It became clear having those opportunities" with local businesses was "a higher priority than going out and marketing the land to some industry we had never met yet," she said.

Des Moines Cold Storage is finishing construction of a $17 million, 111,000-square-foot cold storage facility and headquarters at the industrial park.

And the city is working with Helena Industries on a third expansion at its existing site. Its recent investments have totaled about $6 million.

"Development isn't quick and sexy," Conner said. "Sometimes, it takes years."

'It could be a crown jewel'

Making the city's job a little easier is continued construction of the East Martin Luther King Jr. Parkway extension that's open to East 30th Street.

"That really opens the area up in a good way," Hensley said.

The city would like to eventually connect the road to U.S. Highway 65, an effort that could take an additional $70 million in local and federal funds.

"The city needs to oil the pump to get it going, but the market needs to take over at a certain point," Hensley said.

Des Moines also is working to develop a "rail-port transloading facility" where several railroad lines converge on the former Carroll Auto property the city purchased.

Part of the land is home to the city's new Municipal Services Center.

"It's rare to have that convergence of multiple rail lines," Conner said. "It could provide potentially significant cost savings to area businesses."

Even though the park doesn't have large tracts available to new businesses, Willett, the Cultivation Corridor director, said it still helps distinguish central Iowa.

"It's something most states don't have," Willett said. "It could be a crown jewel, given its potential."

$30 million expansion includes work space, labs

Kemin's latest expansion — its $30 million headquarters, with 94,000 square feet of work space, laboratories and a fitness center — connects to the company's advanced molecular research center, which opened in 2013.

Altogether, Kemin has invested in six manufacturing facilities and three research buildings.

Part of the "bridge" connecting the headquarters and molecular research center is an employee cafeteria, waterfall, garden and outdoor grilling space that gives employees the best views of downtown Des Moines and the Capitol, DuCray said.

That was important to Mary and R.W. Nelson, Nelson's parents, who founded the company 56 years ago and both actively work at Kemin. Daughter Libby Nelson is Kemin's general counsel.

The family feeling is important to Kemin, said Alex Castillo, vice president of Kemin's worldwide human resources.

"Everyone who brings their families to show off the building wants to walk by R.W. and Mary's offices to say hello, shake hands — they're, like, celebrities," he said. "That creates loyalty."

It's pretty common for employees' families to join workers for lunch at "RDubs" cafeteria, Castillo said. And workers can drop in to take pizzas, soup or salads home at a discounted price.

"I've had my kid in here numerous times, and twice he's taken a Sharpie to the wall — he's 3," said Castillo, who gets the chore of cleaning the wall.

'As Kemin grows, Des Moines will benefit'

Nelson believes the state has to start as early as third grade to attract students to science-based careers.

"It's a long-term worry — whether we'll have the skilled people we need," said Nelson, who is working with Gov. Kim Reynolds' team to generate more interest in careers in STEM fields — science, technology, engineering and math.

"We need to get them in STEM and keep them there," Nelson said, adding that most of Kemin's jobs require a grounding in science. 

The company is trying to fill about 110 positions across its operations, which also include China, India, Southeast Asia and Russia.

Altogether, Kemin has 2,200 employees, with about 745 in the U.S. Its American workforce has grown about 50 percent over the past five years.

Nelson said the state's research activities tax credits that companies like Kemin receive — the Des Moines company has received a total of $3.03 million from 2009 to 2016 — "take a lot of abuse," but they help the metro area compete with the company's international research centers.

"If you look at China, for example, a scientist's wages are 50 percent of what they are in Des Moines," he said. "The tax credits help level the playing field."

"Des Moines is our largest capital investment, and it's where we do a huge amount of research," Nelson said. "As Kemin grows, Des Moines will benefit."

State incentives for project

Iowa economic development leaders provided $1 million in direct funding and up to $5.3 million in tax credits for Kemin's $125.5 million project.