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IN THE SPOTLIGHT

The Story of Dr. Paul Matson Orthopaedic & Fracture Clininc surgeon Dr. Paul Matson was raised in Minneapolis and his wife Jodi in Northfield. Both went to St. Olaf College. Paul went on to medical school and orthopedic residency at the University of Minnesota. Mankato, with its vibrant colleges and community, was a perfect fit to raise their children and practice medicine.

Paul Matson, M.D.

In 1983, Paul spent his year between general surgery internship and orthopedic residency volunteering at a remote mission hospital in Cameroon, West Africa. In an interview, he said: It was a French-speaking country, so I had to use my college French during clinic and surgery, which was then translated into the tribal languages. We used a generator for electricity only four hours each day during surgery, so we had to be resourceful without electricity most of the day. For example, we used a WWII hand powered suction pump to reinflate a collapsed lung from tuberculosis. Paul, Jodi, and their five children now volunteer at Kijabe Hospital in Kenya, East Africa, where Paul teaches orthopedic residents surgical techniques. He said: What I like most about working in Africa is having to be inventive with limited materials, adapting the type of surgery to what is available, and teaching the residents there are many ways to accomplish the goal of healing injured patients. These volunteer experiences have been a very important part of our lives. They have shaped our childrenâ&#x20AC;&#x2122;s values and career choices. When not practicing medicine, Paul enjoys biking, cross-country and downhill ski racing, and spending time with family.

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September/October 2013

Contents

THE MAGAZINE FOR GROWING BUSINESSES IN SOUTHERN MINNESOTA

Staff & Contributors Publisher: Jeffry Irish

COVER STORY

Editor: Daniel J. Vance

Strikes, Spares and Splits

Art Director/Staff Photographer: Kris Kathmann

Business is like bowling. It’s all about strikes, spares, and splits. On any given day, you knock down business projects first roll, leave various miscues for mopping up or face tough situations that seem impossible to overcome. Doug and Pam DeMarce are bowling experts. Their business and private lives together have involved rolling stellar 300 games to leaving ultra-tough 7-10 splits. Like other business owners. Like other people.

Advertising Manager: Steve Persons Contributing Photographers: Art Sidner Contributing Writers: Carlienne Frisch, Chris Edwards, Adam B. Summers, Diana Furchtgott-Roth Production: Becky Wagner Josh Swanson

Profiles

Young Guns

We might call it the beginning of a construction empire, we could say the growth of a new generation of business owners, and there’s certainly no doubt it’s an example of a Midwestern work ethic paying off. All three descriptions apply to Civil Ag Group Inc., a partnership of five men that generates annual gross revenues of $25 million and provides work for 110 employees during peak season and 20 employees year around.

Sudden Impact

8,800 for September/October 2013 Published bimonthly

Correspondence Send press releases and other correspondence: c/o Editor, Connect Business Magazine P.O. Box 452, Nicollet, MN 56074 E-mail: editor@connectbiz.com (please place press releases in email body)

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About Connect Locally owned Connect Business Magazine has ‘connected’ southern Minnesota businesses since 1994 through features, interviews, news and advertising.

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In Every Issue

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Mailing: Midwest Mailing, Mankato

Circulation

Columns

Business Trends Bulletin Board Hot Startz! Press Releases National Opinion

Printing: Corporate Graphics, N. Mankato Cover Photo: Kris Kathmann

Editor’s Letter Off-The-Cuff

Circulation: Becky Wagner

HEINTZ TEAM MEMBER PROFILE

Mike Drysdale Service Director

Mike Drysdale grew up in Lake Crystal, Minnesota, which for him was a wonderland of fishing and water skiing and hunting. From helping deliver The Free Press, he knew practically everyone. He graduated from Lake Crystal High School in 1974 and South Central College in 1976. In 1978, he began working at Heintz Toyota and never left.

I went over and gave her a ride home to New Ulm, where she found her spare keys.

“About three years ago, a customer of ours in her 60s from New Ulm telephoned from River Hills Mall to say she accidentally had locked herself out of her vehicle. She thought she had lost her keys somewhere inside the Mall. It was a little after 6:00 pm. So I went over and gave her a ride home to New Ulm, where she found her spare keys. I then gave her a ride back to River Hills Mall. In briefly looking through her vehicle after entering, she found her keys hidden between the console and seat. I have no idea what she did to have the keys there. She still hasn’t forgotten how we helped. Whenever coming in for service, she still thanks me, and so does a friend of hers. I would definitely do it again—for her or for anyone. “I’ve learned two really important things in my 35 years at Heintz Toyota. The first is the customer is most important in our business. And the second is the importance of having a great team of employees with professional training to satisfy customers. “I’ve had two great mentors here. The first was Max Heintz, and the second, Ben Heintz, who has taken the business to the next level with honesty and integrity. Those two people are why we’re successful.”

387-1148 heintztoyota.com Serving Southern Minnesota drivers for 50 years.

EDITOR’S LETTER

Atypical Business Owners Some business owners, their business issues, and their personal lives don’t fit easily into stereotypes. They are square pegs forced into round holes, the perpetual outliers, and virtually indescribable—even after an extended, attempted description. That’s our fare this issue. Our cover story showcases Doug and Pam DeMarce, co-owners of Mankato-based Victory Bowl, Mickey’s Sports Bar & Grill, and $7 million family entertainment center Wow! Zone. Not long ago, the industryand community-active DeMarces took home the Bowling Proprietors Association of Minnesota “2013 Proprietor of the Year Award.” In our in-depth, face-to-face interview titled “Strikes, Spares, and Splits,” they share atypical business hurdles that would challenge any business owner. Our first company profile features St. James-based Civil Ag Group, which at first glance, and given the owners’ ages, could easily be confused for a country rock group releasing its first album. They are atypically young. (See their photo on page 30.) Also, co-owners Mike and Sheryl Gunzenhauser of Winnebago companies Mike’s Ag and M&S Fitness have been involved in more outside-the-norm business experiences than Rick and Chumlee on Pawn Stars. Finally, see our ad on page 28 explaining the rules to our 11th Annual Connect Business Magazine “Business Person of the Year” Awards. Last year’s winner was notable Wayne Kahler of Kahler Automation in Fairmont. This year’s winner could be you. Sursum ad summum,

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North Mankato couple develops regional $7 million family entertainment center Wow! Zone in Mankato.

Business is like bowling. It’s all about strikes, spares, and splits. On any given day, you knock down business projects first roll, leave various miscues for mopping up or face tough situations that seem impossible to overcome. Doug and Pam DeMarce are bowling experts. Their business and private lives together have involved rolling stellar 300 games to leaving ultratough 7-10 splits. Like other business owners. Like other people. After modest beginnings with Victory Bowl

and Mickey’s Sports Bar & Grill in Mankato, the DeMarces in 2008 added on $7 million, 80-employee, family entertainment center Wow! Zone on Adams Street near River Hills Mall. It was a risk worth taking. It was southern Minnesota’s first family entertainment center—and still the only. The DeMarces, particularly Pam, have been industry and community pillars. Doug has been involved with the Twin Valley Boy Scouts board, the Bowling Proprietors Association of Minnesota executive board, Minnesota Valley Civitan, and the Brunswick Customer Forum.

By Daniel J. Vance Photo by Kris Kathmann

But serial joiner Pam—get ready—has connections with the American Cancer Society (current state leadership council), Business and Professional Women (former state president), Women Executives in Business (member), Minnesota Valley Civitan (past president), Greater Mankato Optimist Club (past president), United Church of Christ (trustee board), Sunrise Lions (past president), Greater Mankato Area Rotary (past president), Lasting Imprint (current board), Small Business Peer Council (member), Bowling Proprietor’s Association of America (social media

committee), United Way (past campaign chair), Yellow Ribbon Suicide Prevention Program (board member), SURGE Youth Leadership Program (fundraising committee member), BNI (member), and MRCI Foundation (former board member). Together in 2013, the DeMarces rolled a thunderous strike when Wow! Zone earned the Bowling Proprietors Association of Minnesota “Proprietor of the Year Award.” Like the rest of us, they also have left plenty of spares and splits in their business and private lives. You be the judge.

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Strikes, Spares & Splits

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CONNECT: How did you two meet? Pam: While starting at MSU, I began working at (what is today) Taylor Corporation and after working there seven years I took a second job as a waitress at Victory Bowl a couple nights a week. I wanted to be out with new people because my work at Taylor Corporation was pretty consuming. Doug: She caught me on a night I was working—a Saturday night. By then, I was owner of Victory Bowl. During a mixed doubles league in 1979, I was working the bowling counter and she was the lane waitress. We made small talk and mentioned the possibility of dating. We married in 1982. CONNECT: What about your upbringing? Pam: My family was important, and my parents were really good at shielding us from the bad things in life. We went to church. We did things together as a family. Sunday was family day, which was the day we visited cousins and played all day. It was all about family and showing unconditional love. Doug: Pam has a twin sister, Pat Thompson, who recently retired as a special education teacher in St. Clair. Pam: We are alike in what we think and do, and in our support of each other. If you marry a twin, you end up marrying both twins. So Larry, Pat’s husband, deals with the same issues as Doug. Being a twin is awesome. Because of Pat being (emotionally) close to us, Doug and I are like parents to her daughter and grandparents to her grandchild, Landon. Pat and I both do lots of volunteer work, both attend the United Church of Christ in Mankato, and both like dancing. We often think the same things at the same time. We have three much older siblings. CONNECT: What did mom and dad do for work? Pam: My dad was a hard-working laborer who never made a lot of money. His last job, which he loved the most, was with Farm Systems. We’d had a farm at one time in Minnesota Lake before moving into town when I was five. My

Doug and Pam DeMarce

mother sold Avon and Amway, which got her out with people. She was well liked. My parents were giving people and heavily involved in the community of Minnesota Lake, mostly through church. A lot of people came for their funerals. It was a tribute to who they were. If there was anyone in town needing anything, my folks were always there to offer help, even though they had so little to give. Life wasn’t about “things” with them and how much you had. It was about people. Doug and I married in October 1982, and a month later my dad died, and 18 months later my mom. After that, Doug’s mother became my mother. If ever needing anything, I know I can go to her. CONNECT: And you, Doug? Doug: My grandfather, dad, and two uncles at one time were in the bowling business. My dad ran a bowling business in Albert Lea in the late ‘50s to about 1961, a period in which the union struck at the Wilson Food plant. The strike was violent. The governor called in the National Guard and soldiers lined our streets. It tore our community apart. You were either prounion or not. It divided the churches, schools, and even our bowling leagues. My mom and dad wanted a more peaceful life. So he cashed out of the bowling alley in 1961 to buy a 100-acre farm between North Mankato and Nicollet along Highway 14. It’s a chicken farm today. For school, while working on the farm, I started at age 10 at Holy Rosary in North Mankato and later, Loyola. We had dairy cattle, hogs, and near the end of my dad’s career, egg production. CONNECT: Given where you lived, the distance to Loyola, and your farm chores, you couldn’t have had much free time. Doug: We lived inside the Nicollet school district by a half-mile. We often were the first ones on the bus and the last off. It made for a long day. After getting home, I had to change clothes, get to the silo, and throw down silage. Upon graduating high school at the peak of the Vietnam War, I drew No. 42 in the draft lottery and so I went to the Navy recruiting office at the Post Office in SEPTEMBER/OCTOBER 2013

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Strikes, Spares & Splits

Mankato to enlist. While I was in the Navy, my dad came down with emphysema, a lung disease, which he had contracted from the feather and feed dust in the chicken coops. The Navy gave me a hardship discharge in 1972 so I could help run the farm, which I had intended to do anyway. Dad’s health didn’t get better. Just like Pam when she started working at Victory Bowl, just for something to do, I started at Jerry Dutler’s Double Deuce Bowl in Mankato working a couple nights a week at the counter. Two nights turned into three and four, and then assistant manager, and then manager at Victory Bowl, which Jerry Dutler owned. In 1974, I was managing Victory Bowl one day when Jerry came in saying he had almost sold the business. A potential buyer had died of a heart attack two days before the scheduled closing date, he said.

Strikes, Spares & Splits

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Smoke On The Water CONNECT: Doug, on August 1, 2005, Victory Bowl went smoke-free. Nine months later, you reported to the Mankato City Council that your sales had fallen 7.5 percent and net profit 50 percent, inferring the smoke free designation had played a part. You said a Mankato ban on smoking in restaurants would be disastrous. Was it?

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Doug: My fight against the proposed smoking ban was because it was limited to Mankato. Many people in the hospitality industry were supportive of a ban at the state level because then everyone would be playing by the same ground rules. Years before, we had eliminated smoking in the bowling center and moved all smoking into the bar. I recognize the health benefits of being smoke-free—I stopped smoking myself in 1982 before getting married. When saying “disastrous,” I meant disastrous to the businesses in the city. Customers wanting to smoke would just go to other establishments in North Mankato or elsewhere. I never understood why the City thought it had to be on the leading edge of this movement. Everybody knew a ban eventually would span statewide. Pam: Our customers love it now.

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SEPTEMBER/OCTOBER 2013

Doug and Pam DeMarce

Grandpa gave me one piece of memorable advice. He said you always needed to keep your place up-to-date so someone coming in tomorrow to build a competing bowling center across the street wouldn’t have a place much nicer than yours.—Doug DeMarce. He then asked if I wanted to buy it. I was only 23 and didn’t have a nickel to my name, so my parents helped with the down payment and the rest came from a bank loan. Eventually, they sold their 100 acres because of dad’s declining health. I took over Victory Bowl the day after Thanksgiving 1974. My grandpa had helped his sons get into the bowling business and my parents helped me. Grandpa gave me one piece of memorable advice. He said you always needed to keep your place up-to-date so someone coming in tomorrow to build a competing bowling center across the street wouldn’t have a place much nicer than yours. That’s one philosophy I have always followed at Victory Bowl. We are constantly updating, always wanting to be on the leading edge of technology, such as with scoring and synthetic lanes. I tell other proprietors that story—keep reinvesting in your business.

Strikes, Spares & Splits

Big Foot Sighting Years ago, the Minnesota Vikings organization informed Victory Bowl that some of their players would be bowling during Vikings Training Camp. Doug DeMarce was happy about the extra business, but reluctant to purchase Size 22 bowling shoes for one player because the largest he had ever rented out previously was Size 17. What would he do with the shoes after Training Camp? The Vikings told DeMarce not to worry about it and they promptly paid the invoice. Today, those giantsized 22 bowling shoes still are at Victory Bowl, in the original boxes, after having been used only once. SEPTEMBER/OCTOBER 2013

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Strikes, Spares & Splits

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Just this morning, I was in a small business peer counseling meeting and a lady there mentioned an article that claimed only 25 percent of people love their jobs. Only 25 percent. I am lucky to have had 35 years at Taylor Corporation at a job I enjoyed. —Pam DeMarce. CONNECT: And your career, Pam? Pam: I remember starting like it was yesterday. I began at Taylor Corporation in 1973 earning $1.63 an hour when Bill Carlson was still the owner. While attending MSU full-time, it wasn’t unusual for me to work 20-40 hours a week. After getting my elementary education degree, I had to choose between teaching and Taylor, and realized I didn’t want to teach and loved my work. I was disappointed I hadn’t changed my major to business along the way, but looking back, I got the best training in business anyway. When I met Doug in 1979, I told him on the first date I wasn’t interested in having any children. Having had a stay-at-home mom when I was young, I didn’t see how my career and having children would be good for our children. We both felt the same. We always have been committed to our careers. Doug: We were DINKS: double income, no kids. We have never had kids, but have a “grandchild” through a niece. CONNECT: In many respects, it would appear you both did end up having “children” anyway—they are

Doug and Pam DeMarce

your customers at Wow! Zone. Pam: Yes, I’ve been a “grandmother” to many kids. I have kids running up to hug me all the time. I know Doug would have the same happening if he were here more. He’s not an on-site person anymore. But when Doug was younger, and they had junior bowling, the kids did the same. Doug: I love kids, and probably watched three generations come through our junior bowling programs. Pam: My (Taylor Corporation) career was phenomenal. Just this morning, I was in a small business peer counseling meeting and a lady there mentioned an article that claimed only 25 percent of people love their jobs. Only 25 percent. I am lucky to have had 35 years at Taylor Corporation at a job I enjoyed. CONNECT: Give examples of what you enjoyed. Pam: Last night, I went to a movie with a bunch of girlfriends I had from Taylor Corporation, such as Linda Danielson, who I worked with more than 15 years only desks apart. The time I worked as Brad Schreier’s assistant was when she and I were closest. Brad (who later became Taylor Corporation chief executive officer) was a very smart man, and a great person to learn business from, not to mention Glen Taylor, Bill Kozitza, and Al Fallenstein. As for Al, I work with his daughter now on the Yellow Ribbon Suicide Prevention board. I don’t necessarily miss the work, just the people. In 2000, Brad was close to retiring, and I knew his replacement would want to pick their own assistant. Rather than wait for Brad to retire, I wanted to do something different. I went into sales and called on Office Depot locations around the country to train their employees on Taylor Corporation programs involving business cards, stationery, stamps, banners—whatever. My last year, 2008, I was on the road more than home. I left on July 11, 2008, and four months later helped start Wow! Zone. CONNECT: And you, Doug, more about your career? Doug: I’d be remiss not mentioning my two right-hand men who have been with

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me at Victory Bowl for many years, Mike Rose and Jim Kopischke. They are also stockholders in Wow! Zone. We all kind of run around like chickens with our heads cut off wherever we’re needed. Right now, we operate Victory Bowl on a limited basis, not opening until four in the afternoon. Pam: Our intent was to close the facility and sell the building when Wow! Zone became up and running. Doug: That was our intent, but at the start of the recession the commercial real estate market tanked, so there really was no chance to sell the building at a good price. We have positive cash flow there, though. Pam: As a new business, we were so busy here on Friday night (at Wow! Zone) we had to move the Friday night league back to Victory Bowl. Friday and Saturday was open play here. Our Friday leagues were tying up lanes. CONNECT: What do you two like best about the business right now? Doug: I’m the builder and like projects, such as remodeling. I like the financial end. That’s different from 1974 when I was the front person. Pam: I’m disappointed about what has happened with our relationship, but it is what it is. We are separated and seeking a divorce. This was something we both put

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our whole life’s earnings into and soon won’t be able to work as a (married) couple. The biggest issue is Doug is ready to retire and doesn’t want to be involved in the dayto-day business. To be fair, he did tell me all that throughout the process of building Wow! Zone, but either I wasn’t hearing him or believing him. That aside, I’m having fun doing this business because it’s a people business and I’m a people person. Doug: Pam’s strength is in sales and customer service, which comes from her Taylor Corporation background and natural personality.

the near horizon. Pam: We can’t let what is going on personally affect the business. I’ve done a pretty good job of that, but it’s hard. Doug: Initially, a year ago, I could feel the tension among employees. It’s better. It may not be ideal, but it’s better. Pam: I’m honest about our divorce, and not quiet about it. All my friends know. Doug: Even our league bowlers know. Part of it is our personalities. She is the social person with a big circle of friends and I’m more the loner, with a small handful of close friends.

CONNECT: Given your pending divorce, how do you make things work? Doug: We just do it. It’s a better situation now than a year ago (when we made the decision). I have my job, and she has hers, and there isn’t a lot of time we’re in meetings together. Pam: My life right now is this business. I have more than 80 employees and have made a commitment in order to help make this business succeed. I am trying to stay focused. I need to figure out how to make this (business) work with our not being married. We are going to have to figure it out. Doug: There is no talk of selling out in

CONNECT: Why start Wow! Zone? Doug: We just had an opportunity to grow and give our employees opportunity. Mankato was becoming a regional hub. Victory Bowl had only 12 lanes. If we didn’t act, I could see someone opening a competing, stand-alone bowling center. Also, we realized league bowling wasn’t going to be the cornerstone of a successful bowling business moving forward. League participation nationwide has been declining slightly every year, down 50 percent from its peak. Because of being active with the state bowling proprietors association and visiting national conventions, I had been following the trend for years of the “family

SEPTEMBER/OCTOBER 2013

Doug and Pam DeMarce

During national conventions, manufacturers took us to nearby showplace centers where we picked up ideas. We learned from them. —Doug DeMarce entertainment center.” That was the new model being developed. A traditional bowling center is a seasonal business, doing well only eight months of the year, but a family entertainment center like Wow! Zone can do well year around. For example, Wow! Zone does five times the business of Victory Bowl in summer months. CONNECT: But it wasn’t like you could drive around Mankato to find a template. Your family entertainment center was the first in southern Minnesota. Doug: During national conventions, manufacturers took us to nearby showplace centers where we picked up ideas. We learned from them. In building Wow! Zone, we also involved key national players. Brunswick has done a thousand of these facilities it seems. We used one of the top three architects in the nation for this facility, Dynamic Design. (As for constructing the building, we used Gosewisch Construction, a local company.) For the game room, we

hired a top national consultant. Having all that knowledge helped. It was a huge capital investment. CONNECT: Can you say how much? Doug: This project was in excess of $7 million. Pam: It had been Doug’s dream for a long time. Doug: Expansion had been on my mind. At one time in the early ‘80s we had an option on four acres of land where the old Mankato drive-in theater site was near Mankato Ford. We were going to build a 24-lane center there, but interest rates were 15 percent. Pam: About a year into this project, Doug got a telephone call from someone in town who had contacted Brunswick about constructing a family entertainment center in Mankato. Once he found out we were as far into the project as we were, he moved on to another business. CONNECT: Your timing was uncanny. Doug: Yes, but then the economy tanked.

To move forward, we were lucky to have financing in place involving a letter of commitment from a bank and SBA approval. I know many proprietors in my circle of friends nationally that had projects pulled out from under them then. They had already purchased land and in some cases poured concrete when their bank pulled out. We worked locally with First National Bank Minnesota (and Mankato Branch President Ken Kuehner) and 504 Corporation. It helped us knowing Doug Anderson (Holiday Inn) was building across the street. CONNECT: One thing that could boost your business would be a completed Walmart distribution center. Doug: Yes, and we’re also waiting for completion of a 184-unit apartment complex across the street. Also, I heard Pat Hentges (Mankato city manager) talk in July about extending Adams Street east to County Road 12. That would be key, too. The City of Mankato has been struggling with traffic

SEPTEMBER/OCTOBER 2013

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Strikes, Spares & Splits

This will increase our payroll more than $100,000. Due to our large initial investment, and the economy, we have only so much money left over in terms of positive cash flow. Either we will have to lay off people or raise prices. —Doug DeMarce. control on Adams Street. They desperately need another outlet for traffic in that area, which includes Hy-Vee, Applebee’s, Holiday Inn, Office Max, and Gander Mountain. CONNECT: At Wow! Zone you have a very young workforce. Pam: This is the first job for many of our employees. We help them understand how to work and give them opportunities to learn customer service. CONNECT: In other words, this is a 2013 version of what Carlson Craft was for many young Mankatoans 40 years ago. Pam: Absolutely. Doug: And part of having a young workforce means we pay many employees minimum wage. We are worried sick about the state

increase in minimum wage from $7.25 to $9.50 an hour. I wrote a letter to all three of our local representatives at the state level to show them the math. I wrote State Sen. Kathy Sheran, for one. I bring her up because I sent email to all three at the same time, and heard back from her in 20 minutes. We corresponded back and forth many times. I didn’t get the same response from the other two. Here is what I told her: In round numbers, we have a payroll of $600,000 a year, and two-thirds comes from paying minimum wage. That’s $400,000. Those minimum wage employees generally are either high school students on their first job or wait staff or bartenders making much more with tips. The minimum wage is going from $7.25 to $9.50. This will increase our payroll more than $100,000. Due to our large initial investment, and the economy, we have only so much money left over in terms of positive cash flow. Either we will have to lay off people or raise prices. Since we are already down to a

Wow! Zone Family Entertainment Center Construction Completed 2009

Congratulations Pam & Doug DeMarce On your feature story in Connect Business Magazine. 18

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GOSEWISCH

CONSTRUCTION, INC. General Contracting - Project Management - Design Build

Doug and Pam DeMarce

bare minimum crew, we can’t cut employees. The DFL didn’t think this through on how this impacts small businesses and consumers. This is what I think should be done to fix the situation: First off, Minnesota needs a tip credit. I’m not talking about lowering the minimum wage from $7.25 an hour plus tips and taking it down to $2.13 plus tips like in South Dakota. I’m talking about freezing it at $7.25 rather than increasing it to $9.50. If the minimum wage does go to $9.50 an hour, I’d like seeing a two-tiered minimum wage system, with the lowest tier for young people. The DFL says nobody can live off the current minimum wage. But the fact is nobody with us has to live off just what they earn. This is a part-time second job for many of our bartenders and servers, and the rest of our employees are kids living at home. Target can pay $9.50 an hour easier than Wow! Zone. For us, this minimum wage increase is a killer. It’s a knife in the back. I don’t know where we’re going to come up with an extra $100,000 a year. Pam: I struggle with it, too. This will raise the cost of living of everyone spending money here. The average person paying more will have to tell politicians. Doug: The looming increase in minimum wage is our number one problem. Unfortunately, the people in control of our legislature have never had to make a payroll. They don’t have any idea of what

Jay Weir

Mike Donohoe Strikes, Spares & Splits

Getting to know you:

Doug Demarce

James R. Weir Insurance, founded in 1967, offers insurance packages custom tailored to any business type. Whether it’s insurance for

Born: June 4, 1951.

your building, business property, equipment,

From: near Walnut Grove, Minnesota

liability, worker’s compensation or company

Education: Mankato Loyola High School ‘69, and attended Minnesota State.

protect your business. In addition, we offer

vehicles, we offer products and services to group health plans.

Getting to know you:

Pam Demarce

208 N Broad, Mankato Ph: 387-3433 • Fax: 387-7052 www.weirinsurance.com

Born November 10, 1954. From: Minnesota Lake, Minnesota Education: Minnesota Lake High School ‘72, and Minnesota State ‘76, majoring in elementary education.

Weir working today, to protect your tomorrow. SEPTEMBER/OCTOBER 2013

Connect Business Magazine

Strikes, Spares & Splits

it’s like to actually run a business. Pam: We haven’t raised rates as it is since three years ago. Yet I struggle with it because I don’t think the general public is making that much more the way the economy is now. And then this. CONNECT: And will you also have to provide health insurance because of Obamacare? Do you have more than 50 full-timers? Doug: No, but I don’t think we’re that far off. Our accountants have done an analysis.

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SEPTEMBER/OCTOBER 2013

CONNECT: What would happen if you had to go from 49 to 50 full-time employees? Pam: We wouldn’t. I was in a meeting this morning with other small business owners. They said the same thing. Doug: We were recently at our national convention. Many bowling proprietors are replacing their full-time retiring employees with two 25-hour-a-week part-timers. CONNECT: Pam, I’ve been editor of this magazine 17 years and haven’t yet seen a resume that can match your amount of community involvement. What drives you? Pam: There are so many important societal pieces that need working on. In volunteering, I receive more back than what I give in terms of time and money. I want to be busy and active. Life is meant to be lived. If an organization coming to me expresses a need, and if I can’t help, I will put them in touch with someone who can. I try to say yes to the things that touch my heart. CONNECT: You have been heavily involved with Business and Professional Women. Pam: Young businesswomen of today have a different life. They generally aren’t joiners. They aren’t as engaged with organizations, even though by being engaged they could grow professionally. They are so busy. Since our (marital) separation, I’ve realized I need to take more time for me. My core group of young managers can handle the business now without me. As young women, they are doing things most of us businesswomen would never have the chance to do. They have

Doug and Pam DeMarce

THE ESSENTIALS

Wow! Zone Address: 2030 Adams Street Mankato, Minnesota Phone: 507-625-2695 Web: wowzonefec.com

their families and try not making the same mistakes others might have made 20 years ago in trying to do it all. It’s still a man’s world. When Doug and I are out together, people almost always address him first. That’s the way society is. Doug: I haven’t noticed that. Pam: At bowling conventions, when the two of us greet someone at a booth, vendors always look at and talk to him first. I’ve worked in a man’s world and know I’m not thought of as equal. We’ll get there one day. CONNECT: Without any children, what is your succession plan? Doug: Our niece, Allison. I have two nephews, but they aren’t around or in the business. Pam: I’ve heard people say the only reason people start a business is to sell it. But that’s not why I started this business. It was Doug’s dream and I was willing to support him. I had also been at Taylor Corporation 35 years and was ready for something new. Doug: And the job description here fit her 100 percent. Pam: I do believe God has put me here at this time for a reason. If I’m this happy working here, I must be doing the right thing. CONNECT: And yet you are both moving forward with your businesses, even though you’re moving apart privately. Pam: Our communication will be key. We will have to figure out how to make it work. The most important thing I know about business is you need to have good communication. If you don’t have it, you shouldn’t be in business together. So that’s what we’re going to have to work on. Editor Daniel J. Vance writes from Vernon Center.

Comment on this story at connectbiz.com

SEPTEMBER/OCTOBER 2013

Connect Business Magazine

Sept 14 Buddy Guy

Our first performer this fall is legendary blues guitarist Buddy Guy, who was cut from similar cloth as B.B. King. See him at the outdoor amphitheater.

Oct. 4

Florida Georgia Line

Oct 5

Minnesota State University, Mankato Hockey

Florida Georgia Line is without doubt the hottest country and pop crossover band in years and their chart busting single â&#x20AC;&#x153;Cruiseâ&#x20AC;? will rock Verizon Wireless Center. One of these years you will say you saw them in Mankato.

Maverick Hockey begins another year against formidable WCHA foes. Come see our new NHL-sized ice floor, safer dasher boards, expanded seating, and new seats painted Maverick hues.

High Energy Acts Hit Southern Minnesota This Fall From September through December, Verizon Wireless Center presents a diverse, high-energy, one-of-a-kind line-up to excite southern Minnesotans of all ages and tastes. There’s something for everyone. Hope you enjoy! Burt Lyman Executive Director

Nov 22 Justin Moore with Special Guests Randy Houser and Josh Thompson

When Justin Moore tells his fans at all of his shows that he’s “proud to be from small town USA”, it is from the heart. The Poyen, Arkansas native grew up in a town with a population of 272.

Dec 1

Disney Live!

Dec 12

Mannheim Steamroller

Dec 13

Lorie Line

It’s the freshest version of the popular Disney Live!, an exciting stage show for your children or grandchildren.

The best-selling Christmas musical artists of all-time, Mannheim Steamroller, roll into southern Minnesota to offer another holiday spectacular.You can’t miss this. About a dozen Mankato Symphony Orchestra members will perform.

And how do you describe Lorie Line? This vivacious pianist has captivated southern Minnesotan audiences for years with her imaginative Christmas extravaganzas.

CONNECTING BACK 1 Year Ago

September/October 2012

EXPERIENCED IN:

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Our cover story introduction to Kevin and Kathy Finstad of New Ulm had this tidbit: “Somehow, they compact 30 hours of job, business, and community into a 24-hour day. They co-own and –manage regional onsite shredder RVS Shredding, River View Sanitation, Finstad Realty and Auctioneering, Finstad’s Oak Haven Campground, and the latter’s event center.” Companies profiled: Compart Family Farms (Nicollet) and Powder Werks (Lake Crystal). Memorable quote: “There is no video game that can replace the feeling of rocks flying at you, dust and dirt, the noise, and the feeling of hunting down a competitor on the racetrack.”—Kevin Finstad, of his former hobby, stock car racing. 5 YEARS AGO

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September/October 2008

31196 490th Street, Kasota, MN 56050 507.243.4361 • prairieautomation.com

Minnesota Commissioner of Agriculture Gene Hugoson made our cover. Companies profiled: American Way Realty (Mankato) and Closing the Gap (Henderson). Memorable quote: “American business relationships tend to be impersonal. We buy and sell over the Internet and think nothing of it. In Asia, and some European countries, so much of how they do business is to establish personal relationships first.”—Gene Hugoson. 10 YEARS AGO

September/October 2003 Cover interview: Bob Gallaway of Ridley (Mankato). Profiled companies: Center for Orthopedics & Sports Medicine (Fairmont) and Klassen Performance Group (Minnesota Lake). 15 YEARS AGO

September/October 1998 Cover interview: Curt Fisher (Mankato). Profiled companies: Hybrid Microcircuits (Blue Earth) and Haala Industries (Sleepy Eye). 24

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Read the entire articles at connectbiz.com

BUSINESS TRENDS

Medicare

From the Pittsburgh Tribune-Review: Surgeon Dr. Jeffrey Singer bemoaned the decades-long trend of physicians going from being private practice business owners to “assembly line workers.” He pointed his finger directly at Medicare mandates as the driving force. Singer, a Cato Institute adjunct scholar, said, “I am a general surgeon with more than three decades in private clinical practice. I have watched my profession slowly

evolve into the domain of technicians, bookkeepers, and clerks.” The step-by-step devolution began in the ‘80s when Medicare first instituted price controls and mandated a coding system to label physician services. That seemed harmless enough, but by the late ‘80s, private insurers were starting, said Singer, to peg “their compensation contracts to the Medicare code-based fee schedule, effectively extending Medicare price controls into the private sector.” To meet these new private insurance requirements, private practice physicians had to hire coding specialists, a new occupation, which also added a new, non-reimbursable expense to their payroll. By the early 2000s, Medicare was mandating “protocols and regimentation on America’s physicians through a centralized bureaucracy,” said Singer. It was called “evidence-based” medicine, yet the protocols, added Singer, didn’t provide any measurable health benefits. This added a layer of costs. Then President Obama’s 2009 stimulus package mandated that all physicians and hospitals convert over to electronic medical records (EMR) by 2014—even though no peer-reviewed study had proven any major benefits with a conversion, he claimed. And what if physicians don’t comply? They face Medicare penalties, of course. EMR conversion has added more costs. As if all this wasn’t

TOTAL BUILDING CONTROL

“I have watched my profession slowly evolve into the domain of technicians, bookkeepers, and clerks.” enough to squeeze private practices today, Medicare has been decreasing physician fees. With ObamaCare, history tends to be repeating. The new Accountable Care Organizations (ACOs) resemble the Health Maintenance Organizations (HMOs) of the 1990s. In the new ACOs, healthcare providers and clinics must follow Medicareapproved protocols. And if not achieving certain Medicare benchmarks, they will face economic penalties. So what has government intervention created? Singer opined, “Doctors are increasingly selling their practices to hospitals, thus becoming hospital employees. The doctor-patient relationship becomes adversely affected as doctors come to view patients as the hospitals’ patients rather than their own. By 2011, fully 50 percent of the nation’s doctors had become employees—either of hospitals, corporations, insurance companies or the government. As economic pressures on private clinical practice continue to mount, we can expect this trend to accelerate.”

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BUSINESS TRENDS

Business Development

In June, a Minnesota trade delegation of 35 business leaders and government officials visited Germany, Sweden, and Norway. Included in the group were Greater Mankato Growth CEO Jonathan Zierdt and Mankato City Manager Pat Hentges. What they learned will affect the way Greater Mankato Growth does business for years to come. Said Zierdt in a Connect Business Magazine

interview, “When you go on a trade mission, it’s all about business development possibilities and you can’t (have business development possibilities) without first kindling relationships. Those interactions (in Europe) will lead to potential opportunities for economic growth. Without those visits (to Europe), you don’t get on people’s radar.” In Berlin, Zierdt and Hentges met with executives from Tognum AG, a Daimler and Rolls-Royce joint subsidiary and owners of MTU Onsite Energy (formerly KatoLight), which has business dealings with a number of Mankato-area vendors. Of course, the big question was since this European trade mission was beneficial to area manufacturers, why not hire someone to visit the headquarters of other Greater Mankato businesses located throughout the U.S. and world? Zierdt didn’t discount the idea. The City of Mankato and Greater Mankato Growth have gone on shared headquarter visits before, such as to Bentonville, Arkansas, to discuss the planned Walmart distribution

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“Those interactions (in Europe) will lead to potential opportunities. Without those visits (to Europe), you don’t get on people’s radar.” facility. He said a Twin Cities economic development organization already has a full-time person in Shanghai and someone in Europe on a contract basis to represent Metro business interests. Being included in the trade mission, said Zierdt, occurred because of Greater Mankato Growth’s hiring of Patrick Baker to lobby Greater Mankato interests in St. Paul. Baker had established a relationship with DEED and other statewide organizations that set up the trade mission. He said, “Everything we do starts and ends with the advancement and development of business.”

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SEPTEMBER/OCTOBER 2013

Healthcare costs

In a first-of-itskind pilot program involving LeSueur Inc. and River’s Edge Hospital of St. Peter, LeSueur Inc. employees are becoming much healthier— and potentially more productive—and the company has stabilized healthcare costs. Paul Johnson is director of human resources for $70 million foundry Le Sueur Inc. In a Connect Business Magazine interview, he said, “Like a lot of companies, we were

facing spiraling healthcare costs, an unhealthy workforce, high incidence of smoking, obesity, and diabetes, and a demanding work environment where many employees work ten-hour days and typically don’t see doctors. We are also a family-owned company that cares about its employees and has many long-term employees.” Until recently, Le Sueur Inc. had gone through three straight years of 15 percent annual increases in healthcare costs and knew those increases weren’t sustainable. The company wanted an onsite clinic to encourage a healthier workforce, but didn’t have space. So it reached out to River’s Edge Hospital, which had the space and available physicians. The two businesses reached an agreement. Said Johnson, “We had plenty of patients for them, they gave us a good discount, and in turn we offered our employees free preventive primary care. Also, if our employees followed doctor’s orders, they would get a discount on the portion of the premium they had to pay the company.”

Their third party administrator discounts claims through River’s Edge. Rather than move patients through in assembly line fashion, River’s Edge providers spend about 30 minutes on appointments with Le Sueur Inc. employees and their family members. The program is in its second year and the results have been stellar. Johnson said it was too early to draw conclusions, but last year (2012) his company had “eight to ten” claims of more than $100,000. This year (2013), LeSueur Inc. has had only one and its insurance company renewed their contract this year at only a two percent increase. The free preventive check-ups catch small problems before they become bigger and more costly. Employees and family members see doctors at clinics in Le Center or St. Peter. Only slightly more than 50 percent of employees have chosen the new plan, but Johnson expects to see a significant jump in the next enrollment period as word gets around about physical and financial benefits.

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SEPTEMBER/OCTOBER 2013

Connect Business 2/28/13Magazine 4:30 PM

Call for Nominations

JuDgeD BY:

11 t h A n n u A l

Business Person of the Year Award Nominate a colleague and see them featured on the cover of Connect Business Magazineâ&#x20AC;&#x2122;s January 2014 issue. All nominations are confidential. Previous Winners

2005: Milt Toratti

2006: Bob Weerts

2007: Roxie Mell-Brandts

2008: Jeff Thom

2009: John Finke

Riverbend Center for Enterprise Development

Blue Valley Sod

Jensen Transport

All American Foods

HickoryTech

Nominate at connectbiz.com/bpoy iT’s eAsY To noMinATe! Go to connectbiz.com/bpoy and fill out the entry form by noon, October 4. Three important rules: You can’t nominate yourself; the nominated person must work and live in either Blue Earth, Le Sueur, Martin, Brown, Watonwan, Waseca, Faribault, Sibley or Nicollet County; and the nominated person must not have appeared in a major Connect Business Magazine feature from 2011-13.

NOMINATIONS OPEN SEPT 1 through OCT 4 IN ASSOCIATION WITH:

How the winner is chosen: Connect Business Magazine will learn more about the nominees, and forward the information on to our judges, who are Minnesota State University business professors. Each judge will have up to three votes: five points will be awarded for their first choice, three for second, and one for third. The top vote-getter will appear on our January 2014 cover, and the two runners-up will appear inside the magazine. Judges will take into consideration the person’s character, leadership abilities, community involvement, and business results. Business persons from any business — large or small, profit or nonprofit, large town or small — are eligible.

NOMINATE A COllEAguE TO APPEAR ON THE JANuARY 2014 COVER!

2010: Pamela J. Year

2011: John Roise

2012: Dan & Angie Bastian

2013: Wayne Kahler

2014: _____________

MRCI WorkSource

Lindsay Window & Door

Angie's Kettle Corn

Kahler Automation

Submit a Nomination!

By Carlienne A. Frisch Photo by Kris Kathmann

St. James-based, do-everything, $25 million ag construction business with precocious partners from Fairmont and St. James doing a great deal of business at a young age.

We might call it the beginning of a construction empire, we could say the growth of a new generation of business owners, and there’s certainly no doubt it’s an example of the Midwestern work ethic paying off. All three descriptions apply to Civil Ag Group Inc., a partnership of five men that generates annual gross revenues of $25 million and provides work for 110 employees during peak season and 20 employees year around. Don’t look for this phenomenon in Minneapolis, or even Mankato. Drive south from St. James on Highway 4, pass the tiny community of Echols, and follow the gravel road that leads to Long Lake Church. As you near the church, look to your left toward the growing building site that houses Civil Ag Group. The laidback environment of surrounding farm country doesn’t even begin to accurately reflect the diversity and enormity of the partnership. Civil Ag Group constructs farm buildings, including hog and cattle confinement facilities, machine sheds, and grain bin foundations. They recently added farm drainage and tiling to their agricultural services. The civil concrete sector provides concrete paving, curb and gutter, and sidewalks, as well as installation and repair of underground utilities. The company also provides aggregate sales, trucking, and concrete pumping. “The unique aspect is the scope and variety of jobs we handle,” said Brandon Romsdahl, one of the original owners. He sat with a partner, Nick Romsdahl, and the company controller, Karl Anderson, in a semi-circle for the Connect Business Magazine interview. “There’s no other company, to my knowledge, that has this scope.” continued >

Connect Business Magazine

SEPTEMBER/OCTOBER 2013

Civil Ag Group owners (L to R): Ryan Guritz, Jake Romsdahl, Nick Romsdahl, Brandon Romsdahl and John Taplin.

Young Guns

“Romsdahl Construction was able to establish a relationship with some of the largest hog integrators in the Midwest, who have headquarters in southern Minnesota and we do work for the majority of them.”

Submitted Photos

—Brandon Romsdahl

Connect Business Magazine

SEPTEMBER/OCTOBER 2013

Civil Ag Group | St. James

Civil Ag Group was established on January 1, 2012, when Romsdahl Construction Inc. and Taplin Construction LLC joined forces. Nick Romsdahl originally began Romsdahl Construction as a sole proprietorship in 2003, doing small construction projects such as shingling, siding and roofing. Two years later, his second cousin Brandon Romsdahl joined him, and a limited liability partnership was formed. The cousins were only 18 and 19 years old respectively when they began their enterprise. Despite their youth, both had several years of construction experience. Brandon had been employed by his future father-inlaw, Terry Koch; and Nick learned about construction through years of working with his father, Warren, a building contractor and construction supervisor. Both young men also had experience working for other companies. “When we started, we had a couple trucks, a pickup, and some tools,” Brandon said. “We paid for supplies with cash. We financed each job as we went. We did a lot of shingling and remodeling work of agricultural buildings. Odin State Bank eventually began financing us, once we

started a successful track record, and they have been great to work with ever since. They look at the big picture, not just at numbers.” He continued on, “Romsdahl Construction was able to establish a relationship with some of the largest hog integrators in the Midwest, who have headquarters in southern Minnesota and we do work for the majority of them. Much of the company’s revenue comes from the ag side because of where we’re located and because ag construction was the original business. Our farm construction advertising has always just been word-of-mouth. We do 35 to 40 large jobs each year and many smaller jobs.” Nick added, “We have a lot of private repeat ag customers, and we’ve built some great relationships on the civil side.” Taplin Construction, founded by John Taplin, worked cooperatively with Romsdahl Construction for several years. Brandon explained, “We began working with John, hand-in-hand, back and forth. We decided it would be beneficial to throw it all into a hat and so we became partners. John’s

Young Guns

Building Community The partners of Civil Ag Group belong to the Minnesota Pork Producers, the Minnesota Utility Contractor‘s Association, the American Ready Mix Association, and the Concrete Paving Association, with the latter involvement in Minnesota and Iowa because they work in both states. On the local level, in addition to being members of the St. James Chamber of Commerce, they are involved in numerous organizations and activities. “We support local events, 4-H and county fairs, Relay for Life, the building of Toddler Town, and other organizations,” Brandon said. “We give monetary contributions and often donate CAG tee-shirts and sweatshirts for prizes.” The company’s expertise is showcased in their support of the annual St. James School District 840 Foundation Auction. “We build a playhouse or a storage building each year with supplies donated from a local lumber yard,” Brandon explained.

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background was in street reconstruction and underground utilities. At that point in time, the civil sector of the company expanded. We then acquired three pits from which we draw aggregate materials—sand, gravel and rock.” Nick said, “We were then very fortunate to be able to work with more established companies in the civil sector, which provided us with an opportunity to grow in the market.” The three partners were committed to making a successful merger and sought out the talent they needed to reach that goal. They hired Ryan Guritz, a skilled and respected estimator and project manager, for the civil side. He later became a partner. Jake Ebert was hired to provide his years of knowledge in the building of hog barns, in addition to experience he had gained at a local lumberyard estimating those types of projects. Two full-time mechanics were hired to take care of the large line of equipment, and Karl Anderson was added as controller to manage day-to-day financial affairs.

“We try to do as much of the work ourselves as possible, about 90 percent, with very few subcontractors.” Later in 2012, Brandon’s first cousin, Jake Romsdahl, bought into the business and brought with him the experience and equipment to do farm drainage and tiling. The company’s owners all have brought solid and diverse experience to the enterprise. “Everyone works just as hard as the next person,” Brandon said. “Each helps the other partners. Weekly owner meetings are conducive to solving problems.” Nick said, “We get along amazingly well. The company often has up to fifteen projects going at the same time. Everyone has their own responsibilities.” Civil Ag Group helps clients take their project from conception to completion. The company helps with design, budgeting and scheduling of each project, with a goal of providing timely, safe and cost-effective services. Projects range in size from $50k to $3 million. Because of the merging companies and the expansion of equipment, Civil Ag Group is able to start and complete projects under one roof efficiently and effectively. Timing has played a key role in the company’s entry into the municipal market. Many area communities have aging infrastructure that needs or soon will need replacing. Another key role in the success of Civil Ag Group, Inc. is a strong local and national agricultural economy that requires construction of new animal confinement facilities to meet an increasing global demand for pork and beef. “We try to do as much of the work ourselves as possible, about 90 percent, with very few subcontractors,” Brandon said. “We can control the schedules and the quality of work, and customers like 34

Connect Business Magazine

SEPTEMBER/OCTOBER 2013

Civil Ag Group | St. James

All the softness you love, now in your carpets. Intersection constructed by Civil Ag Group, at the corner of Lor Ray Drive and Commerce Drive, North Mankato.

Young Guns

Off the job

Rickway Carpet … where great floors begin! 1107 Cross St., North Mankato, MN 56003 • 507-625-3089

Nick Romsdahl: Age 28 Hometown: St. James. Marital status: Not married. Recreation: Boating on Long Lake, golfing, season tickets to Vikings games. Brandon Romsdahl: Age 27 Hometown: St. James. Family: Wife Maegan and two children. Recreation: Spending time with family and friends.

there for

you

John Taplin: Age 41. Hometown: Fairmont. Family: Wife Heather and two children. Recreation: Ice fishing and watching children’s sports.

Submitted Photo

Jake Romsdahl: Age 25. Hometown: St. James. Family: Wife Felicia and two children. Recreation: Boating and fishing. Ryan Guritz: Age 34. Hometown: Fairmont. Family: Wife Bianca and three children. Recreation: Motorcycling.

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SEPTEMBER/OCTOBER 2013

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Civil Ag Group | St. James

Young Guns

“We realized early on it takes quality people, which we have, and quality workmanship with quality equipment. This makes for a successful business.” dealing with one person. We do turnkey projects, from start to finish—all the excavation, all the concrete work, and all the building construction. However, we do contract out our pre-cast materials, electrical work, asphalt work, and landscaping.” Nick added, “We realized early on it takes quality people, which we have, and quality workmanship with quality equipment. This makes for a successful business. We learned what our strengths are, and we try to focus on those strengths in the performance of our company. During the busy construction season, the company’s employees work up to 70 hours a week to complete projects in a timely manner. We make every attempt to be an exceptional employer and to treat our employees well. Most employees are from rural southern Minnesota, with the same backgrounds and values we have. Our company has a lot of great people, and that’s been 99 percent of what helped us get to where we are today. We‘re well aware that, while acquiring many assets in the growth of our business, the greatest asset we have is our field employees and our

THE ESSENTIALS

Civil Ag Group Address: 41172 695th Avenue St. James, Minnesota

office staff. They all contribute to our goal of providing the quality workmanship and the customer service that we believe will continue to strengthen our reputation. This will, in turn, continue to make our business profitable not only for us, but also for our employees and our customers.” It’s not only the construction crews that have an intense work schedule. The partners check on each job at least twice a day. They often have three or four projects going at the same time, usually within a two-hour radius of St. James, about which Brandon commented, “We drive from site to site, addressing issues and putting out fires.” Although both Nick and Brandon were reluctant to come up with three words that describe each of them, Controller Karl Anderson answered the question, saying, “Both of them are workaholics, dedicated, and honest.” Brandon explained, “I think listening to the customer’s ideas and needs, along with working with a team of suppliers, has

Phone: 507-736-2187 Web: civilaggroup.com

led to strong word-of-mouth referrals. We know customers expect the highest quality craftsmanship, along with the latest building technology, such as octoform concrete wall systems and PVC liners. We have a solid demand for our services. We display the company logo and signage on all of our vehicles and have a website (civilaggroup. com) where people can learn about us.” Nick said, “We do believe the best advertising is a satisfied customer. By making every attempt to honor our stated commitments, with timely completion of projects and quality work, we’ll continue to generate business through word-of-mouth advertising. We’ve developed strong relationships with area general contractors, distributors, and suppliers of concrete and building materials. Our goal is for these businesses to refer us to their customers who are seeking construction services.” Carlienne A. Frisch writes from Mankato.

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OFF-THE-CUFF

It’s September again? It seems like yesterday when last September arrived, just days after family vacation and the usual lazy summer. I was researching another topic for this column when the Washington D.C. City Council in July predictably voted 8-5 to increase its minimum wage to $12.50 per hour. It affects only the employees of non-union retailers with sales of more than $1 billion operating in spaces larger

than 75,000 sq. ft. Not surprisingly, the vote affected only Walmart. For example, two other mega-billion dollar retailers operating in the District, grocers Safeway and Giant, have union employees. The vote doesn’t apply to them. I say “District” because that’s what most people in the District call Washington D.C., and I say “predictably” because that’s how out-of-touch D.C. government can be concerning business matters. I worked in Daniel J. Vance and around the DisEditor trict for eight years and regularly witnessed such myopia. After the 8-5 vote, D.C. Mayor and Walmart cheerleader Vincent Gray promised a veto, which moved the City Council opposition to physically keep the bill from him for weeks or more until they could strong arm a necessary ninth Council

member to override a veto. As of this writing, the outcome was still uncertain. It’s just a vote. It’s not yet a law. Walmart had planned to open three stores right away and three more in the not too distant future. What has been happening with Walmart there is a microcosm of what has happened with Walmart all over the U.S.—except the stakes in the District are on a grander economic and political scale. This topic was too timely not to feature. For one, Doug and Pam DeMarce on page 18 discussed their frustrations with Minnesota’s increase in the minimum wage to $9.50, which was signed into law by Governor Dayton last legislative session. In time, that wage increase will raise the DeMarces’ payroll an additional $100,000. Unfortunately, their bowling and game customers will have to fork over the 100k because the DeMarces simply don’t have any spare money laying around to pay a higher wage while keeping prices low. So in effect the wage increase will really act as a tax increase on their regular Joe customers, who are not wealthy.

See how local farmers work to keep our waters clean. For decades, Minnesota farmers have voluntarily minimized soil erosion through conversation tillage practices. To learn more ways farmers are doing good work to protect our water quality, get The R.E.A.L. Story at TheREALStoryMN.com.

Brought to you by the Blue Earth, Brown, Faribault, Nicollet/Sibley, Scott/Le Sueur, Waseca and Watonwan County Corn & Soybean Growers and their soybean checkoff. SEPTEMBER/OCTOBER 2013

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OFF-THE-CUFF

Likewise, if Walmart were to proceed to build in D.C. anyway after a City Council override tagging the minimum wage at $12.50, the company would have to drastically raise prices on poorer inner-city customers on everything from groceries to lipstick to televisions. Like any other American company, Walmart isn’t in business to sell merchandise at a loss for giggles and it certainly isn’t into becoming a nonprofit organization. The minimum wage increase would be a tax on many of the District’s poorest citizens. Walmart had been moving forward with six proposed stores in an area covering only 68.3 sq. miles—that’s the size of the District. In comparison, Blue Earth County stretches over 765 sq. miles. Three Walmarts, if strategically placed in poorer neighborhoods, could dominate the District’s lower-income retail trade. Six Walmarts literally would own it. Whether that ninth vote appears or not will vastly affect at least two inner-city

cultures. For one, Walmart with three stores in the District probably would halve the livelihoods of hundreds of entrenched Korean retailers and wholesalers (and the occasional Jewish, Nigerian, Iranian, and Ethiopian), who for decades have dominated through ownership the District’s convenience stores, smaller groceries, general merchandise outlets, and carry-outs. These retailers went there when no one else would after the racial tensions of the late 1960s. Six Walmarts almost assuredly would force most of those retailers out of business altogether, which would lead to the urban acne of hundreds of empty storefronts reaching from seedy Anacostia to tony MacArthur Boulevard. It also would be a knife through the heart of the Florida Avenue Market District, where those Korean wholesalers congregate. What kind of shopper would buy her groceries and general merchandise from aging stores with 50 percent markups when bright and clean—and incredibly inexpensive—Walmart was within walking distance or near public transit?

Which brings us to the second culture potentially affected. If the minimum wage would rise to $12.50 and Walmart abandoned its plans as expected, the District’s poorest residents would feel the sting. For one, most of them will have to continue shopping at Korean retailers almost exclusively because of the absence of shopping and transportation options. The loss of Walmart would mean these people would no longer have the opportunity to cut their food and general merchandise bills on items such as diapers, baby formula, and cough medicine. It also would hurt their chances of earning a living and perhaps starting a career. The District in May 2013 had an 8.5 percent unemployment rate. On an aside, an increase in the minimum wage to $12.50 and a Walmart exit would also sting developers who had grand plans for urban renewal using Walmart as the anchor for tax base-enhancing future expansions. In early August, I telephoned my old boss, Hui Yul Han, who still owns and operates $35 million grocery, tobacco, and candy

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wholesaler DC Cash & Carry, which has been doing business near the Florida Avenue Market District since the 1970s. In a telephone interview, I detected a sense of urgency in his voice when he said, “We do not want Walmart to come. No Korean convenience store of any kind wants them to come in. It would really affect what we do.” So who wins and loses? As of right now, I have no idea, but in the tradition of D.C. politics I’m betting on lots of under-thetable action. By now, you’ve probably already heard or read of the outcome. Finally, don’t forget to nominate a businessperson for our annual Business Person of the Year awards. Nominations are due Friday October 4 at noon. See details on page 28. Thanks for reading our region’s only locally owned business magazine, and the only one reaching 8,800 business decision makers in nine southern Minnesota counties. Until then, anyoungi kasayo.

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ANYWHERE ON

[Editor Daniel J. Vance self-syndicates the newspaper column “Disabilities.” Email press releases and letters to editor@ connectbiz.com by October 1 for the November/December issue.]

SEPTEMBER/OCTOBER 2013

Connect Business Magazine

BULLETIN BOARD

Any chamber of commerce, convention and visitors bureau, or economic development organization in our reading area—large or small, from Amboy to Winnebago—can post on our free bulletin board. For details, email editor@connectbiz.com.

Blue Earth Cindy Lyon, Blue Earth Chamber

Our holiday season kick-off is Friday Nov. 8. Participating shops will show merchandise or will hold customer appreciation welcome/stop-in hours of 3-9 p.m. Trolley rides will be a highlight. Trolley tickets sold at the senior center where a variety of home-based businesses will sell and show goods. The Green Giant Museum will be open until 8 pm. Santa

Fairmont Bob Wallace, Fairmont Area Chamber

Fairmont Area Chamber, in collaboration with Riverland Community College, is sponsoring beginning in September a nine-month-long Martin County Leadership Program. A multi-faceted curriculum of topical seminars will be used to develop the leadership skills of 26 individuals to help ensure the future vitality of our area. Fairmont Area Chamber will present the morning community programs, while Jim Krile, former Blandin Community Leadership trainer for more than 20 years, will facilitate the afternoon sessions.

and carolers out. Other music will be featured. Welcome to beautiful Blue Earth. For more information, see blueearthchamber.com.

Fairmont Mike Humpal, City of Fairmont

Opening in the mall: TrueValue Hardware and Brewkas Coffee House & Café. Bank Midwest relocated to a new State Street building. Devenish Nutrition had a building expansion. Kahler Automation had a 15,000 sq. ft. expansion. Boekett Lumber purchased Fairmont Building Center. The City completed major projects: the Hall and Budd Lakes channel, and the Lair Road bridge open for boat/vehicle traffic; and the new water treatment facility began producing water. Fairmont’s spirit of growth continues.

Lake Crystal Julie Reed, Lake Crystal Chamber

Join the festivities in Lake Crystal on Saturday September 14 at the Fall City Wide Garage Sale. Maps of participating addresses are available at most businesses in town or online at lakecrystalchamber. com. Then watch the Lake Crystal Area Rec Centers Fall Fest 5K/8K race beginning at 10 a.m. This is a family-oriented event with local band “Beg for Justice” starting at 10:30 a.m. There will be activities for all ages. Registration forms available at lcarc.com.

Mankato Shelly Megaw, Greater Mankato Growth

Greater Mankato Growth, along with Visit Mankato and the City Center Partnership, are seeking nominations for a variety of awards honoring businesses and professionals in our region. The deadline to submit a nomination is September 23. Award recipients will be

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Local Chamber & Economic Development News

honored at the Greater Mankato Business Awards & Hall of Fame on November 19. For more information and nomination forms, visit greatermankato.com/business-awards-hall-fame.

Mankato Julie Nelson, Small Business Development Center

What small business loan programs are available? What do lenders look for in loan candidates? What financials and credit score are required for small business loans? Save the date for Meet the Lenders on November 19 from 8:00-11:30 a.m. at St. Peter Community Center. Gain insight from lenders experienced in general and SBA lending, gap financing, and micro-lending. Free event. Sponsored by Small Business Development Center, Southern Minnesota Initiative Foundation, and U.S. Small Business Administration.

HermannMonument.com for more.

Waseca Colleen Carlson, Waseca Tourism & Visitors Bureau

Gather your friends together for a Waseca getaway. Refresh and renew friendships while taking in the fall open house events at Waseca shops. Antique, retro, classic, and modern home decorating items, gifts, and accessories are waiting to inspire you. Enjoy a great meal and a cup of coffee, stay the night in our motels or B&Bs. Enjoy an autumn adventure with more events, shop listing, and restaurants. Click ‘What to do” at discoverwaseca.com.

Madelia

Mapleton RoxAnne Gosson, Mapleton Chamber

The Mapleton Chamber Annual Fun Run was held during Town & Country Days in June. Approximately 45 runners ranging in ages from five to 65 participated this year. Each runner received a T-shirt and a goodies bag for participating. The Community Closet, which sells gently used clothing and household items, is another great event happening in Mapleton each Saturday at the Plaid Piper on Main Street from 9-noon. Come check it out!

New Ulm Terry Sveine, New Ulm CVB

Hermann, cannon fire, and fireworks! On September 7, the New Ulm Battery is holding its 150th anniversary, and the Hermann Monument is celebrating the 125th anniversary of its cornerstone laying. Events will include several bands in the afternoon, a program by dignitaries, and Battery cannon firing choreographed to the 1812 Overture. The highlight of the event will be a huge fireworks display at sunset before wrapping up with more music outside. See

Karla Grev, Madelia Chamber

Three events planned for this fall in Madelia: the reenactment of the capture of the Younger Brothers on Saturday September 14; Pheasant Phest on Saturday October 5; and the 3rd Annual Minnesota Governor’s Pheasant Hunting Opener on Friday October 11-12. History and pageantry both celebrated here in Madelia. We invite you to visit Madelia where you will truly discover “Minnesota Nice.” Visit our website madeliamn.com.

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Sleepy Eye Trista Barka, Sleepy Eye Area Chamber

Sleepy Eye Area Chamber of Commerce salutes our manufacturing businesses all year, but especially in October to observe Minnesota Manufacturing Week. Manufacturing is an important driver to the economy of Sleepy Eye. The Sleepy Eye manufacturers boast many excellent career opportunities and are the heartbeat of our growth and prosperity to our community. Thank you to the leaders, managers and all employees for your support to Sleepy Eye and Sleepy Eye Area Chamber of Commerce.

Waseca Jennifer Dvorak, City of Waseca EDA

Waseca welcomed Berry Pallets and its 31 jobs using a discounted land deal and a 15-year, $240,000 tax abatement that creates six additional jobs. Elegant Creations Granite, Marble & More, Winegar’s, and Folie-Miller Contracting are growing with tax abatements totaling $150,000 and creating eight jobs. The City broke ground on a public safety center, which will transform a vacant building and site into an active public facility. The USDA provided a low-interest loan for the project.

Waseca

Kurk Kramer, Sleepy Eye EDA

Kim Foels, Waseca Area Chamber

Sleepy Eye EDA has been directing the work for the newly established Veteran’s Park in downtown. The KIA Monument will display the names of 25 servicemen from Sleepy Eye giving the ultimate sacrifice. The Veteran’s Memorial Wall will have bronze plates with the names of service members. Also to be installed: an informational kiosk noting local attractions and a city map. Finally, the EDA is advertising the newly developed east side business/industrial and residential lots.

Farmamerica Fall Fair September 7-8 with traditional horse and tractor pulls, antique farm equipment, and more. See farmamerica. org. University of Minnesota Southern Research and Outreach Center celebrates 100 years on September 19 with open house 3-8 pm (see sroc.cfans.umn. edu). Marching Classic Celebration on September 21 includes 100-unit parade. See wasecamarchingclassic.com. Touch of Country Class Boutique September 19-22 and 26-29. Chamber Business and Industry Luncheon October 17 recognizing 2013-14 Business of the Year. See Discoverwaseca.com.

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Connect Business Magazine

Entrepreneurial Winnebago couple persevering through crises has an affinity for opening businesses in their hometown.

By Daniel J. Vance Photo by Kris Kathmann

Business owners aren’t exempted from personal pain. They also can face death and dying, physical and emotional traumas, financial challenges, divorces, swirling relational vortexes, and unfairly get their chains yanked. At times, this pain can occur without warning, as a red-hot meteorite would piercing your bedroom ceiling in the still of late night. Mike and Sheryl Gunzenhauser own Winnebago-based M&S Fitness and 12-employee Mike’s Ag, with the latter heavily involved in installing equipment in hog barns across the Midwest, primarily for mega-pork producer Christensen Farms of Sleepy Eye. Until recently, the Gunzenhausers were involved in other Winnebago businesses—Gift Baskets & More, Tasty Treatz (the former Dairy Queen), and others—before their ordeal began. Said 60-year-old Mike, “Everything happened so fast. Since this April, I have had surgery and lung biopsies. Then my lung collapsed and I ended up at University of Minnesota Medical Center Fairview. I had a really painful chest tube put in. I’ve had chemo. It has been a nightmare. My wife and I still have emotional moments. It’s all new to us and so frightening.” This was the third time a red-hot meteorite had fallen on Mike. The first was in 1967 when his parents without warning pulled him and his sisters from high school in Council Bluffs, Iowa. He traveled the country with them for two long years living in a 15-foot trailer to work seasonal jobs. He was a nomad without friends having to sleep every night on the hard backseat of a 1957 station wagon. The experience shaped him. The second meteorite was in the 1970s, when half a mobile home he and Sheryl were professionally hauling through snakelike Oregon mountains suddenly flipped over from an unexpected wind gust. That left emotional scars. And then this third blow: advanced kidney cancer moving into the lungs. Out of the blue, awakened by another meteorite, Mike and Sheryl hold tight to each other.

continued >

SEPTEMBER/OCTOBER 2013

Connect Business Magazine

Sudden Impact

Mike Gunzenhauser has a soft and friendly aura about him, like that of an aging man who has experienced a plethora of difficulties and somehow been tenderized while persevering through those difficulties when others would have hardened. His family history has warts. Mike’s father labored across the river from Council Bluffs in Omaha at the American Smelting manufacturing plant for 15 years until “his back just broke down,” said Mike Gunzenhauser in a Connect Business Magazine interview. “The company offered him an office job or he could retire. He didn’t like the office job, and also his work doing auto body repairs after that, so my parents pulled us kids out of school and my dad decided to travel around the country looking for work.” His parents never said why. It just happened.

As the world in 1968-69 seemed to be passing him in high gear, he was stuck in neutral. He had only an eighth grade education. His father found construction jobs in Florida, Texas, and Oklahoma, the latter where dad drove truck for cotton mills hauling “reject” cotton to mattress manufacturers. After working long days, Mike would sleep cold nights in their 1957 Chevy wagon while mom and dad shared the trailer with his sisters. It wasn’t the hard work that upset him: he had delivered daily newspapers in Council Bluffs and worked for a local A&W restaurant emptying trash, washing windows, and cleaning a parking lot for $5 a week. What upset him most was having lost his school friends and, because of his parents’ obsessive moving, being unable to make new ones. As the world in 1967-69 seemed to be passing him in high gear, he was stuck in neutral. He had only an eighth grade education. His father found construction jobs in Florida, Texas, and Oklahoma, the latter where dad drove truck for cotton mills hauling “reject” cotton to mattress manufacturers. After two years on the road, the Gunzenhausers returned home to Council Bluffs. Said Mike, “My dad temporarily found another 46

Connect Business Magazine

SEPTEMBER/OCTOBER 2013

Mike’s Ag | Winnebago

job there. Then I found one too and decided I was going to stay, be my own man, and do what I wanted. After a while, my family took off again without me, this time to Washington, where they worked in cherry orchards picking cherries.” At age 18, Mike was starting to thrive being around people again by working at full-service gas stations. He said, “After a few years, I bought a truck to pull wide loads and did that for five years in Oregon, Washington, Nevada, California, Utah, Arizona, and Idaho. I was used to traveling because I had done it with my parents.” In 1974, he met future wife Sheryl while visiting relatives in Wyoming. They were opposites in many respects, including the fact she had been raised in a loving family that had more highly valued children. After they married, Sheryl went on the road with him as an independent trucker hauling mobile homes for clients in Western states. Mike said, “One time, my wife and I were going through Bend, Oregon, hauling half of a double-wide mobile home. Our partner was up ahead with the other half. Oregon had a law stating if the wind was above 25 mph you couldn’t haul a mobile home. We called the state police that day and they said the roads were okay for travel. However, going through the mountains, we began facing

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Police Fun CONNECT: Tell me a story of having worked as a Winnebago police officer. GUNZENHAUSER: Years ago, we had had some vandalism at the cemetery. We presumed it was younger kids who were pushing over the headstones. So we got into the habit of running two squad cars through there on Friday and Saturday nights. Dale Wiederhoft and I were doubled up in one police car and Bob Toland, the chief of police, was in another. When you’re out in the cemetery that late, it can get kind of spooky. One night about 1:30 a.m. when I was with Dale, he dropped me off and I hid behind a headstone. I knew Bob Toland would be driving out soon to make his rounds. As he drove by, I jumped out and in front of his squad car and yelled, “Boo!” If he had a gun in hand, I would have been shot. (Laughter.)”

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Fortunately, Christensen Farms executives, after hearing of the advanced cancer, “treated us like gold,” Mike said. “I can’t say enough about them. I don’t think I could find anyone as wonderful to work with than Christensen Farms. They’ve helped us through other rough times throughout the years, too.” wind gusts. As we came around one turn, the wind catching the side of the mobile home tipped us over. My truck broke loose from the mobile home and we slid along backwards into oncoming traffic. Luckily there weren’t any cars coming. I was thrown across the cab and Sheryl ended up with a black eye. That was a harrowing experience. The truck was totaled. I got a newer and bigger truck, but ended up cutting my loads in half because I was so frightened being on the road.” No longer enthralled with trucking, Mike and Sheryl relocated to Pequot Lakes, Minnesota, where her mom lived, and then to Winnebago

to be near her brother and sister-in-law. While Sheryl stayed home with their two children, Mike found work at the local Cargill plant, and soon became friends with Bob Toland and Bob Perryman, who encouraged him to consider a law enforcement career. In order to become a police officer, Mike, who had an eighth grade education, first had to pass his GED (general educational development) test. After passing, he continued working at Cargill while serving part-time as a Winnebago police officer. Mike left law enforcement for Ag Distributing in Amboy in the

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Mike’s Ag | Winnebago

early 1990s, where he would become a crew foreman and work several years installing gating, concrete slats, and feed systems in new hog barns, primarily for Christensen Farms of Sleepy Eye, which later would become the world’s largest privately owned pork producer. At times, Christensen Farms went through a company called Hog Slat to purchase the equipment Mike installed. It was a Hog Slat foreman one day in 1996 who encouraged Mike to leave Ag Distributing and start his own business. “I was leery starting (Mike’s Ag) because I had never taken on anything so big,” Mike said. “I had only a single-car garage and had to buy my own tools. I bought an old 1971 Chevy Suburban and carried my tools in it. One guy left Ag Distributing to join me and I hired another. I did a lot of business at first for Hog Slat itself, and not so much for Christensen Farms.” The first few years of Mike’s Ag were financially tight. By then, Sheryl had quit working for Telex, a Blue Earth plant to be her husband’s bookkeeper. Her new, part-time job working as an office manager for Winnebago Manufacturing helped pay bills during the winter, when hog barn construction slowed to a crawl. By 2002, Mike’s relationship with Christensen Farms improved and that segment of his business roared back.

“I was leery starting (Mike’s Ag) because I had never taken on anything so big,” Mike said. “I had only a single-car garage and had to buy my own tools. Basically, from then until April 2013, Mike and his crew almost constantly were on the road installing equipment for Christensen Farms, primarily in Illinois, Minnesota, and Iowa. The company Mike’s Ag was placing nearly all its eggs into the Christensen Farms basket, had ceased advertising, was turning away some non-Christensen Farms business, and had stopped constructing Northland pole barns on the side. Mike’s Ag was highly vulnerable should anything negatively affect his crucial relationship with Christensen Farms. “Then I found out this April I had kidney cancer,” said Mike. “I had been tired, worn out, and had pain in my side, but had attributed it to getting older. I’d considered going to a doctor, but my business took me out of town so much it wasn’t easy (making an appointment).” Mike’s more-than-capable son Chris took over company reins. Fortunately, Christensen Farms executives, after hearing of the advanced cancer, “treated us like gold,” Mike said. “I can’t say enough about them. I don’t think I could find anyone as wonderful to work with than Christensen Farms. They’ve helped us through other rough times throughout the years, too.” Sheryl Gunzenhauser has a round face, expressive eyes, and a voice that cracks with emotion when talking about her husband and his accomplishments, especially considering his less-than-stellar family upbringing in Council Bluffs.

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She said to Connect Business Magazine, “Everything (starting this April) happened so fast. The doctors at University of Minnesota Medical Center Fairview said the cancer was stage four and had metastasized to his lungs. It hit us both when we saw the sign outside that said, ‘University of Minnesota Cancer Care.’ I felt like I was stabbed in the stomach. You don’t believe it until you see it.” Dealing with his cancer was difficult enough for just Mike’s Ag, but the Gunzenhausers had other businesses to worry about, too. They had been entrepreneurs off and since 1990 after opening The Kozy Kitchen restaurant in Winnebago, which Sheryl ran for two years as waitress, cook, and bookkeeper. Then after working Telex in Blue Earth for five years, she left to become bookkeeper for Mike’s Ag in 1997. Ironically, in 2000, after Mike’s father passed away from cancer, Sheryl became heavily involved with a number of nonprofit organizations that sought to brighten the days of children with cancer, such as Chemo Angels, Hugs and Hope, and Make a Child Smile. Said Sheryl, “I started doing ‘care’ packages for these children with cancer and my friends

Daniel Vance is also seeing clients in Mankato through Footnotes Family Counseling Services.

www.e id e b a i l l y. c o m

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There were other businesses. Sheryl started M&S (for Mike and Sheryl) Fitness in 2009 in Winnebago, which has 24/7 access and every fitness need for customers, from weight machines, treadmills, and stationary bikes to free weights. They purchased the equipment from a former Duluth fitness center. Sheryl said, “We charge $37.41 per month, and customers can receive a 10 percent discount paying by the year. We try being flexible for customers. For example, one couple both joined and paid for a year, and both lost their jobs within weeks of joining. They didn’t think they could afford it, and we refunded their money. It’s a small town, and you have to be flexible. Stuff happens.” As for their restaurant business purchased

Individual and/or family counseling for family and marital relationships, grief and loss, career and life adjustments, work relationships, anxiety, depression, and posttraumatic stress.

507.387.6031

Financial Advisor is a Registered Representative of and offers securities through Securities America, Inc. Member FINRA and SIPC Investment Advisory Services offered through Eide Bailly Advisors, LLC, a Registered Investment Advisor. Eide Bailly Financial Services, LLC is the holding company for Eide Bailly Advisors, LLC. Eide Bailly Financial Services and its subsidiaries are not affiliated with Securities America. Securities America and its representatives do not provide tax or legal advice.

wanted to do them, too. I was having all these supplies coming to our home and thought of opening a store to (facilitate) that and also to have some fun.” Gift Baskets & More began in 2005 and closed late 2011 after the Gunzenhausers made the decision to cut back on work hours to spend more time with their grandchildren—even before they learned of Mike’s cancer.

Call for an appointment Daniel J. Vance MS, LPC, NCC Licensed Professional Counselor, National Certified Counselor

Vernon Center

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SEPTEMBER/OCTOBER 2013

Mike’s Ag | Winnebago

THE ESSENTIALS

Mike’s Ag Founded: 1997 Address: 17 7th Avenue NW Winnebago, Minnesota Phone: 507-893-3753

in 2011, Tasty Treatz, the former Winnebago Dairy Queen, the Gunzenhausers decided in late 2012 to put it up for sale; not because of business reasons—it was doing fairly well—but due, again, to their desire to spend more time with grandchildren. After closing this last winter, they were going to continue operations again this last April, but decided against it after learning of Mike’s cancer. They just didn’t have the time. They spend two weeks of every month in Minneapolis at the cancer center. The reason the Gunzenhausers purchased the Dairy Queen was to sate Mike’s desire to keep the restaurant open to benefit the community. Her eyes moistening, Sheryl said, “Mike is proud of what he has accomplished, including his work with Christensen Farms and their relationship. We aren’t rich by any definition, but Mike rose from a background of not having anything at all. We start businesses here because Mike adores Winnebago and always wants the town to succeed. He loves seeing a new business come in.” The prognosis for Mike doesn’t look great. In July, the First Presbyterian Church in Winnebago hosted a fundraising event to help cover his growing medical bills. Yet even in the midst of struggle, Mike still has plenty of hope in the future. He rests well knowing his businesses are in competent hands, with son Chris, Sheryl and daughter in-laws filling in. Also, he has deeply etched memories of having survived and grown as a person after two previous red-hot meteorite strikes. Don’t bet against him getting through a third.

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Editor Daniel J. Vance writes from Vernon Center.

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Very New or Re-formed Businesses or Professionals New To Our Reading Area

St. Peter

St. Peter’s Mattress Factory Outlet Bob Emery gives most of the credit to the start of his new business to his partner, Bill Peterson, and a little to Aunt Opal Mae and Uncle Ken Emery of Vernon Center. “I knew about St. Peter because as kids we’d drive through it from our home in White Bear Lake to my aunt and uncle’s home. My dad and Ken were close brothers,” said Emery in a telephone interview. In 1983, he started his career as a self-proclaimed “mattress geek.” He worked 13 years for Mattress Value Super Stores until that chain went out of business. Unemployed during the hot real estate market of the mid-‘90s, he joined Edina Realty as a real estate agent. Though he did well for six years, the occupation was outside his comfort zone. From then until recently, he worked at furniture and mattress retailers, including the latest, Mattress Monster, which closed December 2012 in Burnsville. About the same time, he married a North Mankato woman, found financing through a friend (Bill Peterson) of his old Mattress Monster boss, and opened St. Peter’s Mattress Factory Outlet this June at 108 South Minnesota. “I sell Therapedic mattresses,” said Emery. “They’re made by

Medallion Sleep Products of St. Paul, which also makes King Koil. No doubt in my mind, I sell the best mattresses made. What I like about Medallion is that instead of spending money on advertising, they put that money into lower prices.” He carries twin, full, queen, king, California king, 3/4 size— and does special orders. He offers a cool gel foam mattress. Prices range on new mattresses from $188 to $4,000. For larger orders to get better pricing, he picks up direct from the factory. As a sideline, he carries a small line of fully reconditioned mattresses starting at $279. Hours are 10-6 M-F, 10-5 Sat. and 10-6 Sun or by appointment. St. Peter’s Mattress Factory Outlet Address: 108 South Minnesota Telephone: 507-934-8209 Email: bobemery11@live.com

ART SIDNER

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Gaylord

Dollar Depot

WINTHROP NEWS

You could say DeAnn Woods and husband Lynn are serial entrepreneurs. Their latest small business effort, Dollar Depot, which opened on July 31 at 123 Fourth St., serves the communities of Gaylord, Arlington, Henderson, Gibbon, Fairfax, Winthrop, New Auburn, and Lafayette. “We own a number of businesses in Gaylord and Winthrop,” said 48-year-old DeAnn in a Connect Business Magazine telephone interview. “We started Sibley Interiors 20 years ago, Logos and More (a silk screening business) about ten years ago, and Anytime Fitness, which we started nine years ago. We’ve always had family-owned businesses. And now with Dollar Depot, we are trying to bring big-town (dollar) merchandise to a smaller town. We want to do whatever we can to help out the community.” Lynn grew up in North Mankato, and DeAnn in Lafayette. His mother was a buyer for Brett’s Department Store. The couple met in Hutchinson while working at Hutchinson Technology where DeAnn was a trainer and Lynn a training coordinator. Over time, Lynn quit his position to partner with his fatherin-law in a carpet installing business, which began their entrepreneurial activity. Said DeAnn, “We have cleaning, kitchen, and pet supplies, toys, healthcare items, office supplies, and much more. Everything in the store is one dollar. We even have name brands.”

Because of owning so many businesses, the Woodses rely heavily on a trio of experienced women who worked at the former Hanson Drug in Winthrop, including manager Sue Rickheim. Said Woods, “We have confidence (the three) will do well for us.” Over the last four years, the Woodses have chaired the Winthrop Farm City Funfest and been active in other area activities and organizations. She said, “My husband and I are very motivated. We like starting new businesses and putting the right people in place to help us out.” Dollar Depot Hours: M-F 9-8, Sat. 9-5, Sun. 10-3 Telephone: 507-299-6082 Address: 123 4th Street

SEPTEMBER/OCTOBER 2013

Connect Business Magazine

HOT STARTZ!

Very New or Re-formed Businesses or Professionals New To Our Reading Area

Le Center

Six-lane Le Center Lanes offers a full food menu, including pizza and beer, and has moonlight bowling on select Fridays and Saturdays, junior leagues, adult leagues, and leagues for darts and pool. He said, “I’m in this for the long haul to completely remodel this facility. We have already redone the flooring and now we’re working on the ceiling. Within the next year, it should be totally remodeled to where it should be.”

Co-owner Ron Long and two partners re-opened Le Center Lanes on June 15 after the facility had been dormant four years. Long has been joined at the hip his entire life with the sport of bowling. In fact, for eight years, he was a Professional Bowlers Association tour regular, even earning at one Michigan tournament $25,000, his best payday. “I’ve been in the bowling business since 1974, when I was setting pins in high school at Stadium Bowl in Bloomington,” said 53-year-old Long in a telephone interview. “I was bowling in junior leagues and averaging 180 as a ten-year-old. I worked for Bill Baden at Stadium Bowl and later at Chanhassen Bowl as a mechanic/manager. It was Bill who wanted me to turn pro.” If not for the traveling required of a professional, Bill would be on tour today. He has retained his Professional Bowlers Association membership and still participates in the annual Milwaukee Open. After leaving tour in 2000, he became a mechanical troubleshooter for AMF, which owns a chain of bowling centers. He said, “I was attracted to (co-owning) Le Center Lanes because of its history, and I knew this would be a gold mine once I got it back to where it should be. We started working on it April 1 and opened June 15.” While a professional bowler, he co-owned at various times other bowling centers.

le center lanes Telephone: 507-357-4063 Web: lecenterbowl.com Hours: Sun-Th 10 a.m. to midnight, Fr-Sat 10 a.m. to 1 a.m.

To be considered for one of three spots in the November Hot Startz!, email the editor at editor@connectbiz.com. Businesses considered must have started—or changed greatly in form—within one year of our publishing date. Professionals chosen must be new to our reading area.

Connect Business Magazine

SEPTEMBER/OCTOBER 2013

ART SIDNER

Le Center Lanes

PRESS RELEASES

To submit a press release for publication:

Email: editor@connectbiz.com Fax: 507-232-3373

Call Karla VanEman today!

Blue Earth

madelia

Express Diagnostics received Class III medical device license approval from Health Canada to market and sell its DrugCheck NxStep Onsite Drug Screen Cup in Canada.

Madelia Community Hospital & Clinic

Fairmont Mayo Clinic Health System—Fairmont awarded $750 health career scholarships to students Elizabeth Kim, Rachel Viesselman, and Susan Kelly. From the Chamber: new members include Fairmont Square Apartments, Murry Carpet Care (Winnebago), Baywood Home Care (Sherburn), Ivy Blu Boutique, and White Orchid Women’s Fashion Boutique; new business include Boekett Building Supply, ClicRWeight, Martin County Read Mix, and TrueValue; and Eunoia Family Resource Center relocated to 1420 North State and Bank Midwest to 301 South State. Eunoia Family Resource Center expanded, with Licensed Psychologist Katie Wojtalewicz LP now at 120 7th Street in St. James and Gregg Neveln providing in home family counseling to New Ulm/ Sleepy Eye clients.

Lake Crystal From the Chamber: The Crystal Waters Project of Lake Crystal sponsors a fourband Concert in the Park on September 22 from 11-7 at Robinson Park.

Madelia From the Chamber: new members include Dirty Paws; and Apple Tree Dental has a new full-time dentist, Dr. Katie Johnson, and Jodi Hager became an advanced dental therapist.

(507) 345-4040

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Madelia Community Hospital & Clinic was again designated as a “Level IV Trauma Center” by the Minnesota Department of Health.

Mankato S&S Thermo Dynamics hired Keith Swanson as operations coordinator and Katie Peterson as receptionist/administrative assistant. The U.S. Green Building Council awarded the Paulsen Architects-designed, 53,000 sq. ft. Mankato Public Safety Center LEED “Gold” status. From Minnesota State: President Richard Davenport named R. Kent Clark as vice president for university advancement. Twin Valley Council Boy Scouts and Lime Valley Advertising partnered to develop the “Expo 2012—The Green Scene” campaign, which received an honorable mention for “Best Marketing Campaign” at the 15th Annual National President’s

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Edward Jones From Edward Jones/Kenneth Klooster: Edward Jones was named the No. 1 large company on the Top Workplaces in Minnesota ranking.

SEPTEMBER/OCTOBER 2013

Connect Business Magazine

PRESS RELEASES

Think differently about work. Think Manpower.

Awards for Marketing Excellence. Mankato Clinic broke ground on a new children’s health center on the Wickersham Campus. From Farrish Johnson Law Office: the firm added attorney Joseph Gangi; and launched a new comprehensive website.

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Primrose Retirement Communities hired Margaret “Penny” Pearson as fulltime LPN supervisor.

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From HickoryTech: the company announced a $0.145 quarterly dividend payable September 5; and the HickoryTech Foundation donated $4,000 to VINE Faith in Action to purchase a utility trailer and to develop a new home modification service. MANKATO

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Marco From Marco: the company received the Cisco “2013 Break Away Partner of the Year” award; and was named to the Top 100 Workplaces in Minnesota ranking, and received the MinneapolisSt. Paul Business Journal 2013 “Best Place to Work” award.

USBank named Suzanne Willaert as commercial relationship manager and vice president.

New Ulm Economic Development Corporation

507-233-4305 • www.nuedc.com nuedc@newulmtel.net

Region Nine Development Commission elected new officers Jim Swanson (Sibley County commissioner, chairman), Brad Ahrenstorff (Lake Crystal mayor, vice chair), Gary Sturm (St. James mayor, treasurer), James Broich (Sleepy Eye mayor, secretary). Wells Fargo named Shane Van Engen as manager of its regional, eight-member, Mankato business relationship manager team.

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Mankato Symphony Orchestra named new president Herb Kroon (Chesley, Kroon, Harvey, and Carpenter) and vice president Jim Santori (Mankato Free Press). Thomas Gengler joined First National Bank Minnesota as retail services manager.

Downtown New Ulm • 16 North German Street

507-354-2716 • www.newulmfurniture.com

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SEPTEMBER/OCTOBER 2013

MANKATO

Manahan & Bluth Joseph Bluth of Manahan & Bluth was named by Minnesota Super Lawyers magazine as a top Minnesota attorney for 2013 in family law.

From Greater Mankato Growth: New members include Profinium, and Edward Jones—Chris Hoffman; Greater Mankato Growth, in cooperation with MSU Community Engagement Office and the Career Development Center, presents the 6th Annual Greater Mankato Campus & Community Fair on September 4 at Myers Field House; new businesses include Child’s Planet, Physique Boutique, Sam‘s Club Optical, and Sam’s Club Pharmacy. Build ‘N Tone Fitness is a participating fitness location for the Healthways SilverSneakers Fitness Program. Representative Steven Helget earned the first-year Pacesetter Second 60 award from Northwestern Mutual. From Eide Bailly: The partners and principals promoted the following to senior associate, Tyler Schaufenbuel, Nicole Sonnek, Andrew Wagner, Todd Williams, and Willy Hanson; and promoted to senior manager Katie Wayne, and to manager Sean Finley, Dan Groh, and Angie Ziegler; the firm hired

MANKATO

Greater Mankato Growth Greater Mankato Growth was recognized for helping retain jobs while partnering with Grow Minnesota!, the Minnesota Chamber of Commerce private-sector economic development program.

Jennifer Faust (marketing coordinator), Marcy Lorentz (accounting services), Joe Buresh (tax department intern), and Katie Kaufman (banking department intern). Seven Mankato Clinic locations were named as 2012 Minnesota Bridges to Excellence award winners by the Buyers Health Care Action Group: Daniels Health Center in St. Peter, Lake Crystal, North Mankato, Mapleton, and Mankato locations on Main Street, Wickersham Health Campus, and the Psychiatry & Psychology Department. From Greater Mankato Growth: Minnesota Soybean Research & Promotion Council hosted in Mankato a group of Japanese pork buyers who were touring Minnesota to meet with pork producers. HickoryTech President John Finke presented at the 2013 InvestMNt Conference sponsored by the CFA Society of Minnesota. Southern Minnesota Initiative Foundation appointed new board members, including Dave Krueger of AgStar Financial Services (Mankato) and Fred W. Krahmer of Krahmer & Nielsen (Fairmont) and new board officer Bukata Hayes of Greater Mankato Diversity Council.

new ulm

August Schell Brewing August Schell Brewing released Star of the North, the first in a line of beers from “The Nobel Star Collection.”

New Ulm From Upper Midwest Management: the company purchased Hoysler Associates of Faribault; and added Jeremy Fluegge as an appraiser trainee. From the Chamber: Andrew Lilleodden (Taco Johns), Tim Rahe (MR Paving), and Mark Petersen (United Prairie Bank) began

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New Ulm Medical Center held a ribbon cutting for a renovated and expanded birth center, a $1 million project. three-year terms on the Chamber board; new Chamber members include Palm Beach and Weeres Pontoons, BoCo Real Estate, Voyageur Web (Mankato), Maree’s Merry Makers Childcare, Paul’s Electric, and The Men’s Collection; Kathy Curry was promoted to assistant vice president of the wealth management and trust department of Frandsen Bank & Trust; Joni Sandmeyer of NU-Telecom completed her “Network Certification”; Michelle Wood is the new director of New Ulm Retail Development Corporation; Jeremy Aldrich is the new manager of Walmart; Hope & Faith Floral and Gifts moved to 211 North Minnesota; and David Hirth Insurance Agency moved to 510 2nd North. Also from the Chamber: Aaron Lambrecht was named president of Shelter Products; the 2013 Tourism Committee of the Chamber presented the “Tourism Hall of Fame” award to the Concord Singers; and Randi Wise of Furth-Meile Insurance Agency completed her life and health classroom training and earned licensure.

New Ulm Area Chamber of Commerce …supporting the businesses who make us a special place to visit for a weekend, or a lifetime. See our historical downtown, do some shopping – open your own business! We’ll help you make it your home….

Nickie Sabo, Sarah Schmidt, and Sheryl Meshke of Associated Milk Producers Inc. earned top awards from the Cooperative Communicators Association annual institute.

North Mankato South Central College Center for Business & Industry hosted simulation training for physicians in the family medicine residency program at Mayo Clinic Health System.

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PRESS RELEASES

Sixth grader Lauren Senden of North Mankato raised $2,700 for the BackPack Food Program. Clay Thompson, chief lending officer of Pioneer Bank, graduated from the SW Graduate School of Banking/Southern Methodist University as one of only two graduates earning leadership and distinction honors. Lucky’s Popcorn Dressing won first place in the “Jalapeno Pepper” category for “Lucky’s Ripe Jalapeno & Garlic Hot Sauce” at the 2013 Cajun Hot Sauce Festival in New Iberia, Louisiana. It won second place in the “Louisiana Style” category for its “13” hot sauce.

North Mankato

Southern Minnesota Initiative Foundation Southern Minnesota Initiative Foundation’s BookStart program, a partnership between SMIF and Capstone, awarded 10,000 books worth $185k to 36 organizations.

St. James Keith Anderson opened a new business, K.A. Guns. Klarice and Matt Rinne are new owners of St. James Golf Course.

Connect Business Magazine

SEPTEMBER/OCTOBER 2013

Jason Kaehler opened a mechanic shop, Anything Auto.

Sleepy Eye Sleepy Eye Ambassadors held a ribbon cutting at NU-Telecom. New Chamber members include BAW Trucking (New Ulm) and Cottonwood Properties.

Waseca New Chamber members include Delta Waseca, Brickhouse Fitness, The Good News Waseca, Huey’s Farm Seed & Precision Planting, Woodridge Interiors, Dave’s Body Shop, Taco Johns, Ditch Creek Landscape & Design, The Purple Goose Eatery and Saloon (new owners Brian and Katie Neegaard), Westbrack Marketing, Blethen Gage & Krause, KAPS Millwrights & General Contractors, Curves, Triple R Auctioneering, and Eide Bailly. The Chamber recognized: State Farm Insurance/Gloria Butler and American Family Insurance/Andy Miller with the Roots Award recognizing 30 years in business; Kari Anderson of Hoversten Patton and Berg, and Dr. Andrew Backes of Waseca Family Dentistry with the Progress Award. From the Chamber: Whitestone Cleaners celebrated 80 years in business; attorneys Robert Schmidt and Dan Hoehn will merge law firms; and Four Seasons Athletics changed owners.

NATIONAL OPINION

Our tax system does not work well. Some say it is broken. Many Americans pay no income taxes. Others pay far more than they think reasonable. Ordinary Americans are angry, particularly when tax administration and enforcement varies by taxpayer. What can be done to get out of this mess? Our tax system has three fundamental weaknesses: (1) marginal tax rates are too high; (2) the structure of both personal and corporate taxes is much too complicated; and (3) the incentives for political mischief at the IRS are high while the likelihood of detection is low.

Connect Business Magazine

It turns out that all three of these weaknesses are related, and they have one simple solution: tax simplification. To see the need for tax simplification, consider the unfolding events of past months. Conservative groups are rightly angry because their anticipated tax break, namely tax-exempt status, was delayed or disallowed. Some lawmakers, such as Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., are angry because Apple took advantage of legal tax breaks. “So the moral of the story of this is that at least in my view, Apple has violated the spirit of the law, if not the letter of the law,” McCain said. But there’s nothing wrong with legally avoiding taxes. A Diana simpler tax system Furchtgott-Roth would solve many problems. It would likely reduce the benefits of tax-exempt status for all groups, including those

SEPTEMBER/OCTOBER 2013

targeted by the IRS. A simpler tax would also reduce incentives of companies such as Apple to avoid the American tax jurisdiction. But most importantly, tax simplification would stimulate economic growth. If you want to find complicated taxes, don’t look to China. The economy grows at nearly double-digit rates, individuals save nearly half of their income, according Chinese University of Hong Kong professor Lawrence J. Lau, and taxes are less complicated than in America. A complex tax code is not a prerequisite to economic growth. America’s tax system has become so complex that a 2012 Taxpayer Advocate Service Report found that 6.1 billion hours per year are spent by individuals and business preparing taxes, not including time spent on audits or responding to IRS notices. House Budget Committee Chairman Paul Ryan once suggested a two-step flat tax, with rates of 10 percent and 25 percent. Everyone would receive a $12,500 deduction—but almost all other deductions would be eliminated. Those who didn’t

like the new simple system could keep the current IRS code. President Obama, Senate Democrats and House Republicans have all proposed lowering corporate tax rates. Reducing and simplifying corporate taxes would bring in more investment from abroad—together with additional revenue. America’s corporate rate, 35 percent, is now the highest in the industrialized world, far above the average of 24 percent in the Organization for Economic Cooperation and Development, our major competitors. Plus, America taxes income on a worldwide rather than territorial basis. Two examples—Canada and Germany— have 15 percent corporate tax rates. Both tax corporate income generated only within their borders, rather than corpora-

tions’ worldwide income, as does America. Some have suggested replacing both corporate and individual income tax codes with a value-added tax or a national sales tax. Both Congress and the American public know that our tax system is not working well. High rates, complexity and the appearance of political mischief discourage even the most earnest taxpayers. The solution is to simplify the tax code. Congress can and should do it, unless it wants to see its future filled with hearings about dwindling tax revenues, corporations that pay no taxes, IRS political shenanigans and taxpayers who have lost trust in government.

Rivers of red ink continue to flow from the federal budget, and we still face an entitlement spending crisis.

can get it by overhauling Social Security. The first thing to understand is that Social Security’s 12.4 percent payroll tax puts a large wedge between what employers pay for workers and what workers actually receive. That artificially increases the cost of hiring, which in turn reduces employment and results in lower overall production in the economy. What exacerbates the problem is that Social Security taxes are piled on top of income taxes, with the result that millions of families face very high marginal tax rates on their earnings. This is important because the harm (or “deadweight loss”) of taxes rises rapidly as marginal tax rates rise, and so the combination of payroll and income taxes causes major labor market damage. Harvard University’s Martin Feldstein estimates that every dollar of increased payroll taxes causes Chris Edwards about 50 cents of added deadweight losses. So let’s say that Congress raised the payroll tax by two percentage points to help “fix” Social Security’s finances. That hike would not just hit workers with an extra $120 billion in annual taxes, it would also cause $60 billion of damage to the economy from labor market distortions. The good news is that there is a way to

But you wouldn’t know it from the priorities of the two political parties: President Obama has been busy pushing for more “investment” spending, and the Republicans have been consumed by the administration’s scandals. I’m all for investigating scandals, but the fuse on the entitlement time bomb is getting shorter all the time. Let’s look at Social Security. Its unfunded obligations are a mind boggling $23 trillion, and everyone agrees the sooner we start tackling this problem the better. There is another reason why Social Security reform should be a priority: The program causes ongoing damage to the economy by distorting labor markets and reducing savings. America desperately needs stronger economic growth, and we

Diana Furchtgott-Roth writes for the Manhattan Institute. This column first appeared in the Washington Examiner.

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NATIONAL OPINION

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reform Social Security that would both fix its finances and reduce the economic damage. That is to convert Social Security to a system of personal retirement accounts, as more than two dozen nations have done since Chile pioneered such reforms three decades ago. The reforms have shown that privatized retirement systems can benefit workers, retirees, and the overall economy. Chile’s personal retirement accounts are funded by contributions of 10 percent of wages. Because workers own these funds, it greatly reduces the labor market damage—or deadweight losses—caused by the system. Chilean workers can look at their paystubs and see that their earnings are going into a secure account that will benefit them. That acts as an encouragement to work. By contrast, in our system, Social Security taxes go into a government black hole, which simply frustrates workers and reduces work effort. Another economic distortion caused by our Social Security system is that it doesn’t create a pool of savings for the economy as private pension plans do—the program simply taxes and spends. With a smaller pool of savings in the economy, the nation’s capital stock is reduced and productivity is suppressed. To appreciate this, consider how generations of Americans have grown up assuming that the government will take care of them in retirement. As a result, they consume much more when they are young, and put less money away for when they are old. Social Security and other welfare-state programs encourage people to become spendthrift and to become too dependent on the government when they retire. If we switched to a Social Security system based on personal accounts, it would get people into the habit of saving, while engaging them in active planning for their own retirement. It would give Americans more responsibility and control over their own financial futures. For the broader economy, savings are the seed corn of growth because saved funds are channeled by the financial system into business investment. Thus switching from the current anti-saving Social Security to a pro-saving personal account system would be a huge spur for investment and job creation in the economy. In sum, the current Social Security

SEPTEMBER/OCTOBER 2013

system is not just financially unsustainable, it is also economically damaging. So let’s phase out this nanny state retirement program and move to a system where individuals take charge of their own retirements. Let’s allow young people to build a more secure nest egg for themselves, while spurring higher economic growth, to everybody’s benefit, at the same time. C h r i s E d w a r d s i s t h e e d i t o r o f t h e C a t o I n s t i t u t e’s DownsizingGovernment.org. This column first appeared in Daily Caller on August 6, 2013.

Californians dodged yet another nannystate regulation in June when the state Senate narrowly voted down a bill to ban plastic bags statewide, but the reprieve might only be temporary. Not content to tell us how much our toilets can flush or what type of light bulb to use to brighten our homes, some politicians and environmentalists are now focused on deciding for us what kind of container we can use to carry our groceries. The bill, SB 405, along with companion bill AB 158 in the Assembly, would have prohibited grocery stores and convenience stores with at least $2 million in Adam B. gross annual sales Summers and 10,000 square feet of retail space from providing single-use plastic or paper bags, although stores would have been allowed to sell recycled paper bags for an unspecified amount. The bill fell just three votes short of passage in the Senate—with

four Democratic senators not voting—and Sen. Alex Padilla, D-Los Angeles, who sponsored the measure, has indicated that he would like to bring it up again, so expect this fight to be recycled rather than trashed. While public debate over plastic bag bans often devolves into emotional pleas to save the planet or preserve marine life (and, believe me, I love sea turtles as much as the next guy), a little reason and perspective is in order. According to the U.S. Environmental Protection Agency, plastic bags, sacks, and wraps of all kinds (not just grocery bags) make up only about 1.6 percent of all municipal solid waste materials. High-density polyethylene (HDPE) bags, which are the most common kind of plastic grocery bags, make up just 0.3 percent of this total. The claims that plastic bags are worse for the environment than paper bags or cotton reusable bags are dubious at best. In fact, compared to paper bags, plastic grocery bags produce fewer greenhouse gas emissions, require 70 percent less energy to make, generate 80 percent less waste, and utilize less than 4 percent of the amount of water needed to manufacture them. This makes sense because plastic bags are lighter and take up less space than paper bags. Reusable bags come with their own set of problems. They, too, have a larger carbon footprint than plastic bags. Even more disconcerting are the findings of several studies that plastic bag bans lead to increased health problems due to food contamination from bacteria that remain in the reusable bags. A November 2012 statistical analysis by University of Pennsylvania law professor Jonathan Klick and George Mason University law professor and economist Joshua D. Wright found that San Francisco’s plastic bag ban in 2007 resulted in a subsequent spike in hospital emergency room visits due to E. coli, salmonella, and campylobacter-related intestinal infectious diseases. The authors conclude that the ban even accounts for several additional deaths in the city each year from such infections. The description of plastic grocery bags as “single-use” bags is another misnomer. The vast majority of people use them more than once, whether for lining trash bins or picking up after their dogs. (And still other bags are recycled.) Since banning plastic bags also means preventing their

additional uses as trash bags and pooper scoopers, one unintended consequence of the plastic bag ban would likely be an increase in plastic bag purchases for these other purposes. This is just what happened in Ireland in 2002 when a 15 Euro cent ($0.20) tax imposed on plastic shopping bags led to a 77 percent increase in the sale of plastic trash can liner bags. And then there are the economic costs. The plastic bag ban would threaten the roughly 2,000 California jobs in the plastic bag manufacturing and recycling industry, although, as noted in the Irish example above, they might be able to weather the storm if they can successfully switch to producing other types of plastic bags. In addition, taxpayers will have to pony up for the added bureaucracy, and the higher regulatory costs foisted upon bag manufacturers and retailers will ultimately be borne by consumers in the form of price increases. Notwithstanding the aforementioned reasons why plastic bags are not, in fact, evil incarnate, environmentalists have every right to try to convince people to adopt certain beliefs or lifestyles, but they do not have the right to use government force to compel people to live the way they think best. In a free society, we are able to live our lives as we please, so long as we do not infringe upon the rights of others. That includes the right to make such fundamental decisions as “Paper or plastic?”

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Adam B. Summers is a senior policy analyst at Reason Foundation. This article originally appeared in the U-T San Diego.

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