Thursday was a big news day in Kansas City, with Ronnie Burt resigning as convention and visitors bureau C.E.O. for allegedly bullying and harassing female employees and Gov. Eric Greitens in the grasp of political self-destruction for allegedly threatening to blackmail a woman with whom he had an affair in 2015.
But another story that surfaced yesterday could well have longer-lasting and deeper ramifications for Kansas City than either of the others. That was KC Star reporter Mark Davis’ story that local technology company DST Systems Inc. has agreed to be purchased by a Connecticut-based rival, SS& Technologies Holdings, for $5.4 billion.
DST employs 14,400 people worldwide and 4,000 in the Kansas City. Just as important as its large employee base, however, is the fact that it has played a huge role in Downtown redevelopment, particularly Downtown’s west side.
It is unclear how the SS&C acquisition affect DST’s employment and presence here, but, as we all know, consolidation and personnel reductions almost always follow corporate takeovers.
In addition, and perhaps of more concern, it seems unlikely DST will continue to maintain the high civic profile it has achieved as a planter of seeds for exciting Downtown projects. Undoubtedly, DST has made a lot of money for its stockholders — it’s a publicly traded company — but it has also made civic betterment, and specifically a revitalized Downtown, a top priority. An essential element of its corporate philosophy was that what was good for Kansas City was good for business.
Consider some of its civic contributions:
:: Conversion of a 104-year-old building at 10th and Central into the extremely successful Crossroads Academy charter school.
:: Assembling the land for the majestic Kauffman Center for the Performing Arts at 16th and Broadway.
:: Conversion of the stately First National Bank Building at 10th and Main into the Central Library, which has become a Downtown destination point for library programs and events.
**
Each of those is an impressive landmark. But to truly appreciate DST’s civic contributions, it is necessary to trace its corporate roots. That takes you back to a Kansas City civic and business giant, the late William N. Deramus III, who led Kansas City Southern during a transformative period between 1961 and 1973.
Deramus
Deramus, who died, in 1989, was a man of few words but had a powerful presence. For one thing, he always wore a hat. In later years it was dress-type cowboy hat. I saw him only one time, to the best of my recollection, at a Kansas City Park Board meeting in the late 1980s, when he was advocating for improvements at the Kansas City Zoo. I remember that everyone at the meeting was extremely deferential to Deramus, including Park Board President Anita Gorman, a civic legend in her own right.
Deramus inherited the reins of Kansas City Southern from his father, William N. Deramus Jr., and led the company through a transformative 12-year period from 1961 to 1973.
The year after he took charge, he changed the company’s name to Kansas City Southern Industries to reflect the diversification he pioneered.
Wikipedia offers this summary of the Deramus-initiated changes:
“In 1969 KCSI started the two largest companies that came out of the diversification, DST Systems and Janus Capital Group…DST Systems is a software development firm that specializes in information processing and management, with the goal of improving efficiency, productivity, and customer service. Janus Capital Group is a finance firm that provides growth and risk-managed investment strategies.”
Both firms were spun off from KCSI. Janus Capital moved to Denver and last year merged with a London-based company. But DST stayed put and, under the leadership of another legendary business and civic leader, Thomas A. McDonnell, became one of the city’s premier businesses.
McDonnell was with DST for more than 40 years, before retiring in 2012. He subsequently headed the $2 billion Ewing Marion Kauffman Foundation for 18 months.
**
What happens with DST from here, no one knows. The acquisition is expected to close by the end of September, assuming DST shareholders and federal regulators approve.
Mark Davis’ story in The Star includes predictable statements from the respective C.E.O.’s of both companies. Bill Stone of SS&C is quoted as saying, “We are…excited to have the DST employees from around the world join the SS&C team and look forward to having a continued local presence in Kansas City.”
DST chief Steve Hooley said, “We thank all of our employees around the world for working hard to make this compelling combination possible.”
I’m sure both men mean what they say, and maybe Kansas City will come out OK in this deal. But the formulaic statements and mutual flattery can’t gloss over the fact that this marks the end of a truly great era for a company that helped lift Kansas City from also-ran status to refreshed, reinvigorated and respected urban center.
Regardless of what comes next…thanks, DST, for all you’ve done to make Kansas City a better place. And thank you, Bill Deramus and Tom McDonnell, for your outstanding leadership.
DST deserves a great deal of credit for all it has done for Kansas City, but the company changed a lot during the past eight years. They’ve had thousands of layoffs, and the company’s Kansas City workforce is less than half the size it was at its peak. The DST leaders who led the charge for civic improvements are long gone, replaced by people with a much more narrow, self-centered vision.
Great insight there, Julius. Having been a longtime KC Star business reporter, plus the fact that your wife Kay worked for DST for many years, you are in a great position to analyze the situation. I had no idea its workforce had dropped by more than 50 percent. That’s very telling — similar to the situation at Sprint, which has an even higher profile and whose downward spiral has made much bigger headlines than DST.
Well, if DST’s run is over, so be it…I’m still raising a toast. Deramus, McDonnell and other executives, like Phil Kirk, made great and lasting marks on the company and the city. We’re all the better for it.
Thanks, Jim! I’m raising a toast as well, and I’ll share a story about how DST got its name. When Kansas City Southern Industries founded it in 1969, DST stood for Data Sys Tance, a play on the words data assistance. But the company soon dropped that name and became simply DST. According to company lore, they did that because they were getting calls from people who thought Data Sys Tance was a dating service. I was 15 years old in 1969, and I sure would have called them for dating assistance if I had known about them, even though it would have been a long-distance call from Memphis.
Good spot, Fitz. That story is of far more importance for the people in Kansas City than either of the other two stories you mentioned and yet how many will be fixated on those stories than the one that will actually impact their lives?
First to Julius: That’s a great story — how DST got its name…But I thought back then people were going to the bars to get dates — like I did — instead of scouring the yellow pages for “dating assistance.” Now, of course, everybody goes to the web…Me? I’d go back to the bars, chugging Club Soda and dragging out my time-tested lines.
…Regarding your comment, John…I cannot let it go by that The Star chose to put the DST story on the very back page of the A section. That was a very short-sighted call by the editors. Whoever made that call must be relatively new to KC.
The obvious story to sub out of Page 1 was the one about Mayor Pro Tem Scott Wagner’s wife getting bounced from her consulting job with Clarkson Construction because Scott recently voted against Carkson’s would-be partner on the new airport.
That’s an interesting story but really not worthy of Page 1, in my opinion. Bill Clarkson took a completely logical and predictable step in hitting the Wagners where it hurt.
I’m not arguing with Wagner’s vote because Edgemoor seems to have lost its grip on the contract, but he had to expect payback. That’s politics. And I completely endorse Bill Clarkson’s action; I would have done the same thing.
…And while I’m talking about The Star, congratulations are in order for Steve Kraske, who today produced one of the best columns he’s ever written. It perfectly sums up the inherent danger in electing people, like Trump and Greitens and Frank White, who have no political experience but are seen as some sort of political political saviors because of their success in other arenas. Kraske’s closing line is, “A little experience (in politics) may not be such a bad thing after all.”
Well spoken, Steve. I hope KC Star readers are paying attention.
So does that mean you’re not going to vote for Oprah? :)
Regarding DST: I always hate when a company loses its local connection. Never seems to be a good thing for those left behind. I lived through a couple of those in my work career and it never turned out well.
Probably won’t be voting for Oprah, right…My personal favorites — among Democrats, of course — are, in no particular order, L.A. Mayor Eric Garcetti, Colo. Gov. John Hickenlooper and NY senators Kirsten Gillibrand and Chuck Schumer. I’d give anything to vote for Claire McCaskill, but she’s going to have her hands full in our own blood-red state against Josh Hawley — unless Hawley, like Greitens, turns out to be not as clean and fresh as he’s have people believe.
And, while we’re engaging in political conversation, can we just get rid of Trump and restore some decency to the presidency???? Holy shithole@!!!
Great article Jim, it can’t be understated what great impact Tom McDonnell and DST had on our community. I kind of saw this move coming after Tom McDonnell left and I can’t remember if it was because of pressure from a major shareholder or just the new CEO’s decision but I recall them selling off all of their “non core” businesses after McDonnell retired which greatly shrank their employee count locally. Under McDonnell it was somewhat of a conglomerate investing in companies in multiple industries, namely real estate. The new CEO made the decision to dump all of those investments and focus on solely data processing. On another note-it will be interesting to see how the choice to hire a “Outsider” at Cerner will affect their civic involvement. I spoke with somebody recently who is very involved in Civic Activities around Kansas City who said that a lot of times when one of our Cities bigger companies hires a non local person at the helm their civic contributions usually diminish. The example he used was H&R Block after the Bloch’s relinquished control.
Thanks, Patrick…You offer a good window into DST’s post-McDonnell philosophy and strategy. I didn’t realize they were sloughing off non-core businesses under his successor, Stephen Hooley.
Jim, I would recommend the following article from the Atlantic http://theatln.tc/2Dd7BaW about the impact of relaxed merger and acquisition laws have had on mid-sized cities. My former home of 30 years, St. Louis, is the poster child of the impact of these policies. When I started work in St. Louis in 1986, St. Louis was one of the top headquarter cities in the country. Since then greats such as Anheuser Busch, Ralston Purina, McDonald Douglas, TWA, Boatman’s Bank, Mercantile Bank, May Department Store, Sverdrup Engineering, Union Electric, A.G. Edwards Brokerage and others are all gone and with them the active civic leadership of the business titans many of whom grew up in St. Louis.
After retirement for about two years in 2011-12, Debra and I worked almost full-time in Kansas City on Jackson County’s rail initiative. People would ask us what we found as the difference between St. Louis and Kansas City? There were two things; an energetic and organized millennial contingent in KC and active hands on civic engagement by the leaders of the business community. Even as hired guns from St. Louis, we had access to these leaders to discuss the vision of rail for KC and how they could get involved. We would see them at civic meetings working to make Kansas City Better. It was refreshing.
The changes at DST might be the canary in the coal mine for KC. What’s the future of Hallmark, KCS, Commerce and others? Who will replace the leaders of these legacy companies?
That’s quite a list of headquarters company losses in St. Louis, Tom. that category, headquarters companies, is where the St. Louis are long superseded Kansas City. I did not realize so many of the companies you ticked off had been sold to out-of-town interests.
Your closing concern about the futures of companies like Hallmark and Kansas City Southern makes me cringe…In this environment, it seems like any company — regardless of size and importance to community — can be swept up in the consolidation fever.