MN Valley Business Magazine, April 2019 by Free Press Media

The Definitive Business Journal for the Greater Minnesota River Valley April 2019

Mike Hahn is regional director of the SBDC. Photo by Pat Christman

Passing it on Succession planning a growing focus Also in this issue • UBER EATS HITS MANKATO DELIVERY MARKET • GLOWING HEART AND HOME OF MANKATO • THE SOCIAL BUTTERFLY

The Free Press MEDIA

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The Roses and Thorns of “Love Contracts” By: Jennifer G. Lurken 62% of workers say they have gotten romantic with a coworker, 38% of workers admit they have dated a co-worker at least once during the course of their career and 17% of co-workers reported dating co-workers at least twice.1 In the #MeToo era, employers are looking for ways to protect themselves from sexual harassment lawsuits and regulate romantic relationships in the workplace. One idea that is starting to gain traction is “love contracts” (also called office relationship contracts). A love contract in the employment context is a signed written agreement between two coworkers that does not require coworkers to disclose intimate details of their relationship but acknowledges that the relationship is a consensual relationship. One key provision in the love contract is an agreement by the employees that the relationship does not constitute a violation of the company’s harassment policies. Other key components of the love contract are to remind the coworkers of the employer’s equal opportunity, antidiscrimination and anti-harassment policies. Love contracts can help to identify any potential conflict of interest as a result of the relationship and solutions for the conflict. The love contract should also have a provision that states the employees will not engage in public displays of affection while at work or work functions and will maintain professional conduct at all times. Additionally, the love contract should recognize that relationships don’t always work out and contain a provision that says each party is free to leave the

relationship without any retaliation. For employers, the benefits to having two coworkers who are in a romantic relationship sign are love contract are potentially decreased sexual harassment litigation risk and the opportunity for management and HR to highlight and reinforce acceptable standards in the workplace. However, love contracts are not all roses. One of the major problems with love contracts, is that they can be viewed by employees who are not involved in the relationship as a signal that the relationship is “blessed by the employer.” This can be problematic, in that it may lead the way to possible complaints that sexual favoritism is sanctioned by the employer, even though it may create a hostile work environment for employees. Furthermore, decreased moral, administrative burdens and increased secrecy are prickly thorns of a love contract that an employer’s human resources department has to weed through. Some employees may view the love contract as an invasion of privacy and as a result, moral may be decreased by requiring employees who sign love contracts. The requirement to sign a love contract might push relationships into secrecy, which would defeat one purpose of the love contract. Additionally, an employee who felt pressured into the relationship to start with could also claim he/she was pressured into signing the love contract as well. By requiring love contracts, human resources will be tasked with additional administrative burdens of keeping track of the

love connections in the workplace, maintaining files for those workers who have signed the love contracts, and a heightened sense of duty to monitor the relationship. Human resource professionals would also be tasked with determining when a relationship is serious enough to require a love contract be signed. Additionally, the relationships most likely to result in sexual harassment claims may be the ones conducted in secrecy and not likely going to be signing a love contract. These would include relationships that involve extramarital affairs or workers who are not engaged in a truly consensual relationship. Remember, love contracts do no take the place of: • Effective policies, • Sexual harassment and discrimination training, and • Open communication and messaging. Alternatives to love contracts that should be considered by employers include policies that ban all romantic relationships in the work place or that ban relationships between a supervisor and subordinate. Each employer should think about their workforce, industry and work environment and determine the best road to take to decrease the likelihood of litigation. 1 Brandon Gaille, https://brandongaille. com/19-unbelievable-workplace-romancestatistics/ May 23, 2017

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MN Valley Business • APRIL 2019 • 1

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F E A T U R E S April 2019 • Volume 11, Issue 7

Many business owners are ill prepared for selling their business, whether it’s to their kids or others. Now more focus is being put on succession planning help.

Brandon Poliszuk started The Social Butterfly after graduating from Minnesota State University and is already working with the likes of the NFL, NBA and Minnesota Wild.

When Uber Eats offered their appbased food delivery service in Mankato recently, Zanz Mexican Restaurant was eager to sign up and says it is working well for them.

Hans Schwanke, manager for the Mankato branch of Glowing Hearth and Home, says there are many more fireplace options than when he started in 1996.

MN Valley Business • APRIL 2019 • 3

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APRIL 2019 • VOLUME 11, ISSUE 7 PUBLISHER Steve Jameson EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Dan Greenwood

PHOTOGRAPHERS Pat Christman Jackson Forderer COVER PHOTO Pat Christman PAGE DESIGNER Christina Sankey ADVERTISING Danny Creel Sales Joan Streit Jordan Greer-Friesz Josh Zimmerman Marianne Carlson Theresa Haefner ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Justin Niles DIRECTOR For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6364, or e-mail advertising@mankatofreepress.com. MN Valley Business is published by The Free Press Media monthly at 418 South 2nd Street Mankato MN 56001.

■ Local Business memos/ Company news.....................................5 ■ Business Commentary.........................7 ■ Business and Industry trends..........22 ■ Retail trends.....................................23 ■ Agriculture Outlook..........................24 ■ Agribusiness trends..........................25 ■ Construction, real estate trends.....26 ■ Gas trends........................................27 ■ Stocks...............................................27 ■ Minnesota Business updates............28 ■ Job trends.........................................28 ■ Schmidt Foundation.........................30 ■ Greater Mankato Growth..................32 ■ Greater Mankato Growth Member Activities ............................34

From the editor

By Joe Spear

Mankato retail: A tale of two cities

n interesting new report from the University of Minnesota Center for Urban and Regional Affairs shows Mankato fourth in vitality for retail and consumer service out of 47 cities studied in Minnesota, not including the metro area. The center studies how each of the cities emerged from the recession of 2007-2009 by measuring retail sales and consumer services sales like hotels and shows, from 2009 to 2015. Mankato was ranked fourth in vitality in these areas in terms of total sales behind Rochester, St. Cloud and Duluth. It’s a bit surprising to see however, that the report shows total retail and consumer service sales dollars down 5 percent for Mankato from 2009 to 2014. (The 2015 number was an anomaly the Minnesota Depar tment of Revenue could not identify). And while Mankato sales declined in constant dollars by 5 percent, sales were up in Rochester by 16 percent, in St. Cloud by 10 percent and in Duluth by 7 percent. I was skeptical of the numbers and when I called the Department of Revenue for an answer, they said retail and service sales can be down for a number of reasons, including the economy, business closing and opening and business address changes and moving. But another report by the Minnesota Depar tment of Revenue that shows unaudited retail sales only, not including the hotels and shows, indicated Mankato retails sales (excluding food and clothing) were up 14.2 percent from 2009 to 2016, or about 2 percent annually. Total retail sales including food and clothing were up 27 percent, about 3.5 percent per year.

4 • APRIL 2019 • MN Valley Business

Part of the discrepancy comes between the two reports comes from the constant dollars used in the university report, which would mitigate the overall percent gain. But it’s clear from both reports, Mankato retail trade is slowing down in terms of its annual rate of gain. Gains were usually in the area of 5 to 10 percent from 2003 to 2008, compared to 2 percent to 3 percent from 2009 to 2016. Mankato retail sales took a hit starting in 2016, where they were actually down slightly from 2015, but by less than half a percent. So what happened in 2015 and 2016? The farm economy might offer a clue. Net farm income in the Mankato area was $20,000 in 2015, a 10 year low, with large numbers of farmers showing a loss. Prices for corn had dropped precipitously in that time period from about $6 per bushel to $3.50. Another 30 percent of Minnesota farmers lost money in 2016. There’s more bad news. Another report by the city of Mankato showed Mankato restaurants and bars lost about $2 million in sales in August, 2018 compared to the August 2017, the last year of the Vikings Training Camp. Overall Mankato retail sales for 2018 were above event with 2017, according to the city’s local sales tax figures, but that figure does not count food and clothing, items that are not taxable. The closing of Sears, Gordmans and Gander Mountain in 2017 and Herberger’s in 2018, all large clothing retailers, will undoubtedly impact overall Mankato retail sales negatively. Then add the loss of Lowe’s, and any gain in retail sales will be tough to achieve in 2019. One also must consider the

impact of Amazon and other online retailers. The university’s report notes $1 in $10 retail dollars now go to online retailers outside the state, a figure that is expected to grow to $1 in $6 by 2021. This trend has broad implications for main street retailers. The U of M report shows Minnesota lost 12 percent of its main street retailers in 2015, or 5,270 retail businesses. On the “bright” side, Mankato lost fewer retail stories than other regional centers. From 2009 to 2016, the number of stores declined by 4.6 percent in Mankato while Duluth declined by 6.4 percent, Rochester by 9.6 percent and St. Cloud by 11.6 percent. Mankato has grown in the last decade as a regional retail mecca of sorts. It looks like the trend might be waning a bit.

Local Business People/Company News ■

Gag Sheet Metal honored

New Ulm-based Gag Sheet Metal was named to the 2019 Circle of Champions by Bryant Heating & Cooling Systems, a part of Carrier. The 114 Bryant dealers in North America recognized as members of the Circle of Champions are selected on overall growth of Bryant-branded product purchases, highefficiency and indoor air quality equipment purchases, customer satisfaction and participation in various dealer programs and promotions. ■■■

Farrish ad series honored Joe Spear is executive editor of Minnesota Valley Business. Contact him at jspear@mankatofreepress.com or 344-6382. Follow on Twitter @jfspear.

Read us online!

The Farrish Johnson Law Office “Witness to History” ad series has received a gold award as part of the 2018 Service Industry Advertising Awards. It is a national competition that recognizes creative and communication excellence in the service industry. This year judges reviewed more than 1,800 entries from more than 600 agencies. The 52 ads that comprised the series were created by Lime Valley Advertising. In celebration of the firm’s 125th anniversary, the law office chose to reflect on and share events from its own history along with local, national and world events that paralleled them. Once a week for 52 weeks, “Witness to History” ads appeared in color on the front page of the Mankato Free Press. Lime Valley also received silver awards for work on the Greater Mankato Growth Inc., logo and the Midwest Dairy Association, Bringing Dairy to Life Event. They received four merit awards, including for work on the River’s Edge Hospital, OrthoEdge ad series and Martin Luther College, Advent Devotions booklet

Drummer joins RE/MAX

Deb Drummer has joined the RE/MAX Dynamic Agents group. She has lived in Mankato for 30 years and has almost a decade’s worth of experience as a licensed Realtor. She was formerly with Coldwell Banker Welcome Realty. ■■■

Olson named to board

Steve Olson has been appointed to the board of directors of First National Bank. Olson began his banking career in 1988 working for First Bank in Brainerd before moving on to their Mankato location. After his tenure at First Bank, Olson became president & CEO of MinnStar Bank in Mankato and Lake Crystal. In April 2018 he retired. Olson has served at the local, state, and national levels for a number of banking associations including the Independent Community Bankers of Minnesota and the Independent Community Bankers of America. ■■■

Fisher Group is top office

Coldwell Banker Commercial Fisher Group has been named the 2018 #1 Office in the state of Minnesota for Coldwell Banker Commercial. The designation is based on closed adjusted gross commission income. President, broker and owner, David Schooff also holds the No. 1 salesperson spot in Minnesota. Schooff has earned the Circle of Excellence honor for the past four consecutive years, placing him in the top 2 percent of Coldwell Banker Commercial sales professionals nationwide.

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MN Valley Business • APRIL 2019 • 5

Seifert joins firm

Fafinski Mark & Johnson said James Seifert has joined the commercial law firm as a shareholder in its general corporate & business and mergers & acquisitions practice groups. Seifert was previously executive vice president, general counsel and secretary of Ecolab and with Bemis and The Tennant Company. FMJ has offices in Eden Prairie and New Ulm. Seifert is a New Ulm native.

College in their nursing program and other areas of recruitment. ■■■

Christensen a Rising Star

Lake City, Utah in June. Christensen is an Audit Manager and an alumna of University of Wisconsin-La Crosse.

Jenna Christensen received a Rising Star award at Eide Bailly. The award recognizes top performers who demonstrate behaviors beyond what is expected of them in their position and uphold Eide Bailly culture. Recipients are invited to attend the annual Eide Bailly Partner Meeting, which is held in Salt

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Lutheran Home names directors

The Lutheran Home Association (TLHA), a non-profit health care and disability ministry, recently added new members to its board of directors, including Lance Schwartz of Mankato. Schwartz is director of institutional communication at Bethany Lutheran College. He will help further develop TLHA’s relationship with Bethany

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Business Commentary

By Dean Swanson

Create a lean business plan that can be revised often

ne of my latest SCORE clients asked me “I think that I may need a business plan, but what will it do for me?” That is a super question. Let me show you some things about business plans that I have learned from Tim Berry, who is the founder and chairman of Palo Alto Software and is passionate about bringing good business planning processes to businesses large and small. Tim focuses on creating planning processes that optimize for management and accountability. I have used this company’s “Live Plan” with several clients over the last several years. Tim wrote a recent post called “20 Reasons to Write a Business Plan” that appeared first on his website https://timberry.bplans.com. I recommend that CEOs go to this web site because it is rich with help about business planning. In this recent blog, he reflects on some of the main arguments for writing a business plan. (Go to the website for his complete set of suggestions) He points out “Please note, that a business plan is not necessarily a traditional formal business plan. It ought to be a lean business plan that gets reviewed and revised often. It ought not to be static, used once, and then forgotten. His suggestions apply to all businesses, startup or new.

Key elements of a lean plan

1) Manage the money. Plan and manage cash flow. Will you need working capital to finance inventory purchase, or waiting for business customers to pay? To service debt, or buy assets? To finance the deficit spending that generates growth? Are sales enough to cover costs and expenses? That’s planning. 2) Set strategy. Strategy is focus. It’s what you concentrate on, and why. It’s who is in your market, and who isn’t; and why and why not. It’s what you sell, to whom. You need to set it and then refer back to it, frequently, as things change. You can’t revise something you don’t have. 3) Set tactics to align with strategy. Tactics like pricing, messaging, distribution, marketing, promotion have to work and they have to align with strategy. You can’t manage a high-end strategy with low-end pricing. 4) Set major milestones. Concretely, what is supposed to happen, when? who is responsible? Humans work better towards specific milestones than they do moving in general directions. New product launch, website, new versions, new hires. Put it into milestones.

5) Establish meaningful metrics. Of course, that includes money in sales, spending, and capital needed. But useful metrics might also include traffic, conversion rates, cost of customer acquisition, lifetime customer value, or calls, emails, ads, trips, updates, hires, even likes, follows, and retweet. Good planning includes methods to track. 6) Set specific objectives for managers. People work better with specific objectives, especially when they come within a process that includes tracking and following up. The business plan is the perfect tool for making this happen. Don’t settle for having it in your head. Organize and plan better, and communicate the priorities better 7) Share your strategy selectively. Let other people involved with your business know what you’re trying to do. Share portions of your plan with key team leaders, partners, spouse, bankers, allies. 8) Deal with displacement. You have to choose, in business; particularly in small business; because of displacement “Whatever you do is something else you don’t do.” Displacement lives at the heart of all small-business strategy. 9) Decisions on space and locations. Rent is a new obligation, usually a fixed cost. Do your growth prospects and plans justify taking on this increased fixed cost? Shouldn’t that be in your business plan? 10) Hire new people or not. Who to hire, why, and how many. Each new hire is another new obligation (a fixed cost) that increases your risk. How will new people help your business grow and prosper? What exactly are they supposed to be doing? The rationale for hiring should be in your business plan. 11) Make asset decisions and asset purchase or lease. Use your business plan to help decide what’s going to happen in the long term, which should be an important input to the classic make vs. buy. How long will this important purchase last in your plan? Sorenson is a volunteer Certified SCORE Mentor and former Regional Vice President for the North West Region. seminnesota.score.org

MN Valley Business • APRIL 2019 • 7

Scott Michaletz and his wife Gail have been transitioning their insurance agency to their sons Matt and Jon.

Passing the baton

Succession plans key for small businesses By Tim Krohn | Photos by Pat Christman

cott Michaletz took over his father’s insurance business, and as he got nearer to retirement, he and his wife, Gail, wanted a strong plan in place for their two sons, Jon and Matt, to take the reins of Kato Insurance. “I’m very proud of them. They’re both smarter than I am. They enjoy what they do and we’re fortunate to have a good staff,” 8 • APRIL 2019 • MN Valley Business

Michaletz said. When he turned 60 three years ago, he and Gail put a plan in place to have their sons acquire a certain percentage of the business over several years. “In a few years they’ll get another percentage of it and when I’m 70 they will acquire the agency at a fair price.

Cover Story

left: Jon Michaletz, right Matt Michaletz They’ll pay us off over 10 years. That will be a big chunk of our retirement, of course,” he said. “This is our plan as it is today and as with any plan it is subject to change. We will continue to make adjustments as the future presents itself.” He thinks a good plan will help the future of the business. “If you set a good price and they take over, they have every incentive to grow it. Each year we give them more responsibilities and Gail and I slip out of here a little more often.” Jon and Matt have been at the agency for several years and work with the agency’s clients, insurance companies and do marketing and other work. “There are no secrets and they make decisions as owners,” Michaletz said. He enlisted the help of their accounting firm and legal advice to make the succession plan strong. Michaletz said the plan has made the several insurance companies they work with happy. “It helps our insurance companies who are our partners. They can see the future of Kato Insurance and they can see the future is planned. There’s a lot of other agencies that are being bought up by big companies and that concerns our insurance companies.” The transition plan Kato Insurance went through is a model for how to do it right according to those who

help guide business owners on planning to sell their business. A good succession plan is something many owners put off too long or fail to do properly. Mark Greenwood, of Compeer (formerly AgStar), said it’s a topic that comes up routinely from their farm clients. “We get asked a lot about it. It’s nice to see the next generation come back to the farm, but if you have multiple family members, how does that all play out?” Eric Opsal, of Seccurian Advisors of America in Mankato, said many of the businesses they work with are multi-generational operations. “In southern Minnesota it’s often a case of the business going from the grandparents to the parents and then to their children. “We work with businesses on the challenges as they move through the generations, getting equitable value and working on any family issues when some of the kids are taking over the business and some aren’t.”

Communication key

Opsal said that whether it’s key employees who are being pegged to take over the business or family members, owners need to keep everyone informed. “The most important thing is to communicate early and often.” He said that can be tough for an owner who has

MN Valley Business • APRIL 2019 • 9

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always called all the shots. “They’re used to having the buck stop at their desk and often what they do wrong is make the (succession) process almost a globe of secrecy. They think they can work it out alone with an attorney or CPA, but not involving the Locally and family owned since 1974 subsequent owners or partners is a mistake. Their hearts are in the right place but their process is flawed,” Opsal said. Greenwood said it’s also important that as an owner begins the process they leave open all possibilities. “Don’t jump to conclusions, especially if you have, say, three kids. The first child comes back and they give that one a good part of the ownership, and if another one comes back, how does that play out? So they need to have a longterm view of the world. What does all of the family want to do and how does that align?” he said. “If you jump to conclusions right away, that can cause some real disruptions in the family and that’s the last thing you want.” Greenwood said the businesses also need professionals to help. “You need a strong tax finance person and some strong legal advice and working closely with your lender along the way. Each family business is unique so you can’t generalize about a lot of things.” He said that beyond legal and finance help, family-owned businesses need to keep family in mind. “There are people out there who look at the family dynamic. You can have a good tax plan and

Eric Opsal of Seccurian Advisors of America in Mankato. legal advice, but if your family dynamics aren’t sorted out, they might not be as successful. There’s a high failure rate for the next generation when there isn’t a good plan.” Greenwood said many family business owners encourage their kids to go out and do something else for a few years before returning to the business.

“They get an understanding of other views before they come back. I think that’s helpful because it brings value back to the family business because you’ve seen other things.”

Valuation help needed

Opsal said another thing that can trip up a succession plan is inaccurate valuation of the

business. “A lot of time for the owner it’s not just an economic business but a personal thing. I encourage customers to seek out a third party to do valuation and to be open minded about what they say. They’re looking at it much more objectively.” Opsal said business owners are more subjective and tend to

MN Valley Business • APRIL 2019 • 11

Mark Greenwood of Compeer. over value assets and opportunities. “If a manufacturer spent $800,000 of their hardearned money a decade ago to buy a piece of equipment, they don’t tend to think of it as depreciated, used equipment. They tend to think of the tough, important risk they took to buy it back then.” Greenwood said it’s rewarding to work with their small-business owners. “When you look at ag or any business in general, they’re all entrepreneurs. Over 90 percent of all businesses are family owned. I

Greenwood said it’s rewarding to work with their small-business owners. think we forget about that sometimes when we think of the Walmarts and Targets of the world.”

SBDC focus The

12 • APRIL 2019 • MN Valley Business

state

Small

Business

Development Center has been focusing more on helping businesses with succession planning. “In outstate we have a lot of business owners in their 60s and 70s, and they aren’t prepared for business succession,” said Mike Hahn, regional director of the local SBDC, located in the MSU Strategic Partnership building on North Riverfront Drive. Hahn’s office is in a pilot program with Sibley County and others to create a website to give support to people selling their business or those who want to

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Brandon Poliszuk’s business grew out of a project he did while attending Minnesota State University.

Developing brands

The Social Butterfly connects businesses, audiences

By Dan Greenwood Photos by Pat Christman

Butterfly. randon Poliszuk has been busy. The “It’s very humbling and rewarding to get 23-year-old marketing major nominated for something like that,” graduated from Minnesota State Poliszuk said. University in 2017, and With initial plans to he is already working move to Los Angeles on internet campaigns after graduation, with the NFL, NBA and Poliszuk took notice of the Minnesota Wild. In THE SOCIAL May, he will be accepting Mankato’s efforts to BUTTERFLY the Young Entrepreneur retain college graduates 424 N Riverfront Dr. #110A, and decided to stay. Award from the Small Mankato Business Development After working out of a Center, which spans coffee shop, he and his 763-486-8694 nine counties in Facebook: The Social Butterfly employees moved into a southern Minnesota, for Hubbard Building office his internet marketing business The Social immediately after college graduation.

Cover Spotlight

14 • APRIL 2019 • MN Valley Business

Brandon Poliszuk of The Social Butterfly. “From the four years I’ve been here, I saw buildings starting to go up. I saw people’s minds starting to open, I saw the food truck park,” he said. “When I saw Mankato start to get more openminded, I saw a large opportunity in a gap in the market of how there is not a creative agency that is connecting to the new up and comers.” Poliszuk’s company, which has a staff of five, aims to bridge that gap between businesses and a wider audience. What began as a project for an MSU management class became the catalyst for a successful business strategy. Burrito Wings near campus became his first customer when the owner at the time gave his team full reign of the restaurant’s social media account. But instead of just writing Facebook posts, they took it a step further towards engagement and dialogue. “I started realizing that if you build relationships, that’s how you build an audience,” he said. Soon other local businesses took notice. Jake Hoffman, a student who was in the same management class as Poliszuk and is now on the payroll of The Social Butterfly, said their work with Body Concepts of Mankato attests to their successful strategy. It’s essentially connecting people who prioritize physical health on social media with a company that provides that service. “We saw where the underpriced attention was, that’s Facebook and Instagram right now,”

Hoffman said. “So we put a lot of our advertising budget towards that for our clients. We saw a really good return off of it. What that means is the reach and the impressions that you get is pennies to the dollar.” What started out as a social media marketing company has evolved into what Poliszuk describes as a creative agency. Rather than aggregating content, they produce their own multimedia. Shor tly after founding the business, Poliszuk bought a camera after helping a friend create a video for a clothing company. That’s when he realized how much of a role creativity plays in content creation and engagement. “I have a balance between my business mindset and my creative mindset – I’ve always drawn, I really appreciate art,” Poliszuk said. “If I’m grabbing Google images, most people can tell when there’s a stock photo and so if I’m able to produce content that’s high quality and in-house, brands can utilize me a lot more often. The horizon gets more widened out.” When they sit down with a new client, Poliszuk said the first thing they ask is what that business owner’s ultimate goals are and who they want to reach. From there they create a voice, personality and identity behind their brand. “You look at a brand like CocaCola,”Poliszuk said. “They sell water and sugar. But when you

watch their super bowl commercials it’s all about world peace, connecting people and international involvement. They sell soda. When you think about it, those two things should not be correlating. When you create a brand that stands for something, you build an audience. You’re not going to make ever y single person happy but if you make one person that much happier, they’re going to resonate with your brand.” After developing a reputation around Mankato for connecting businesses to a specific audience, Poliszuk set his sights nationally. At Super Bowl parties with friends, his attention was focused less on the game than the advertisements. By maintaining an active presence online, he was able to stand out from competitors and gather the attention of the NFL, who he worked with over the Super Bowl. That came about from following the trends of each demographic and age group. “One that’s up on the horizon through people younger than me is an app called TikTok; you essentially lip sync and cut up video segments to a song. A week before Super Bowl weekend, 75 million kids downloaded it in one weekend. So regardless how ridiculous all these social media platforms sound, if there’s attention on there, your brand can utilize it. It can be subliminal; it can be forward facing.” But Polsizuk emphasizes that they are not just a young marketing company that use social media to reach a younger audience. Their focus spans all ages, connecting a younger business with an older audience or vice versa. The key, he said, is bridging those generational gaps rather than focusing solely on one demographic. “We have versatility in what our capabilities are,” he said. “We want to be the one-stop shop for all your creative needs. The most significant thing from 2019 and moving onward is gathering attention, no matter how you have to do it, the more attention that you have you can direct your audience into whatever objective you want them to go in.” MV

MN Valley Business • APRIL 2019 • 15

Molly and Wes Otto are taking over Zanz Mexican Restaurant from their parents.

To your door Uber Eats enters the local food delivery market By Tim Krohn Photos by Pat Christman

onvenience for customers is the connects private drivers with riders via mantra for businesses these days. smartphone applications, launched its Grocery stores are offering home transportation service in Mankato in the delivery. More stores are spring of 2017, about the offering free delivery or same time Lyft began its allowing people to pick up service here. Uber has online orders at the store been delivering food via or at the curb outside the its independent drivers for ZANZ store. a few years in larger cities 1041 Madison Ave, In the restaurant and is now expanding into Mankato delivery arena, several more markets. 507-388-4789 national companies and a Wes Otto, whose family zanzmexicanrestaurant.com plethora of smaller owns Zanz Mexican regional startups are Restaurant, said they’ve jockeying to deliver food from partnering so far been pleased with their new partnership restaurants to local residents. with Uber Eats. Recently one of the biggest, Uber Eats, “We haven’t had any complaints or issues,” launched its service in Mankato. Uber, which Otto said.

Feature

16 • APRIL 2019 • MN Valley Business

When people connected to the Uber Eats app make an order, it’s transmitted to a tablet inside Zanz. “It makes a pretty loud ring when it comes in so the staff can’t miss it. You have 30 seconds to accept the order and then you start making it. You hit ‘ready’ when the order’s ready and a driver they assigned stops and picks it up.” Otto said Uber Eats takes 25 percent of the order total for their fee and they charge a delivery fee to the customer getting the food. Otto said the delivery fee has consistently been $4.99 but said he was told it could go higher depending on the distance. So far, the delivery area radius for the local restaurants involved in Uber Eats is not very large. He said people in west Mankato and North Mankato are apparently not in the delivery area, at this point anyway. “It seems to be mostly on the hilltop right now.” Other hilltop restaurants initially involved locally were Jersey Mike’s, McDonalds, Red Lobster and Subway. Delivery areas and the number of restaurants involved is likely to expand as the service grows locally.

Seamless startup

Otto said Uber Eats was easy to work with. “They tell you everything you need to know and answer all your questions. They have you send over your menu and what things you want to sell. They move fast. We were up and running in a few days.” He said the service works well for Zanz because their building isn’t set up for a drive-thru. Otto said smaller deliver y companies have come around before but Zanz decided to wait. “Uber Eats fee is bigger than some of the others but with their national exposure and the fact they’re really marketing this makes it worth it.” He said if another big delivery player, like GrubHub, comes to Mankato Zanz would likely sign up with them as well. “Uber has no rules we can’t be on multiple platforms.” Otto’s parents, Rick Otto and Marie Simmonds, bought Zanz in

Uber Eats orders come into Zanz on a tablet. 1987. Now he and his sister, Molly Otto, are buying the business from their parents. Molly runs day-to-day operations at the restaurant while Wes, who also runs an ad agency, helps out when he can. Otto said some customers of the long-time taco shop may be surprised Zanz is using the latest app-based deliver y ser vice. “Mankato maybe thinks of us as old school. We still have a paper ticket wheel. So people maybe don’t think of us as forward thinking.” There are several large and small companies trying to get a foothold in the on-demand delivery sector. A recent market report said

DoorDash is now the top food delivery service after knocking off legacy leader GrubHub in consumer spending market share, according to research firm Edison Trends. When it comes to dollars spent, DoorDash owns 27.6 percent of the market followed by GrubHub, which has steadily lost ground and accounts for 26.7 percent. Uber Eats takes the third spot claiming 25.2 percent of the market. Still, the San Francisco-based Uber Eats reported last month that it projects it will deliver $10 billion worth of food around the world this year, which is $6 billion more than last year. The platform was launched in 2014. MV

MN Valley Business • APRIL 2019 • 17

Hans Schwanke, manager for the Mankato branch of Glowing Hearth and Home, joined the business in 1996.

Warm and snug

Glowing Hearth and Home offers variety of fireplaces

By Dan Greenwood | Photos by Pat Christman

ozying up by a fireplace on a cold day provides heat, but it’s also enjoyable to watch. The Yule Log broadcast on TV channels during the winter holidays is a case in point. Viewers watch a fire burning and being tended to on television. But the options for installing a real fireplace are growing, and becoming more affordable. Hans Schwanke, manager for the Mankato branch of

18 • APRIL 2019 • MN Valley Business

Glowing Hearth and Home, said his industry of selling and installing fireplaces was limited to just a few options back in 1996 when he joined the business. Now, he says, there are hundreds of different shapes, sizes and designs to choose from – with ventilation that can control, distribute, and limit heat. “It’s just an aesthetically pleasing product,” Schwanke said. “People want it, and there’s a fireplace for every

The Hearth and Home showroom in Mankato shows a wide variety of fireplace models. budget too.” regularly dip into the subzero range, electric heating Fireplaces illuminate on display in the store, and prices skyrocket, costing homeowners hundreds of Glowing Hearth and Home’s staff of seven sell, install dollars a month. and service fireplaces for customers A hundred years ago, homes within a 60-mile radius around were smaller and easier to heat Mankato. It’s an industry that with a wood fire. According to the Schwanke said coincides with U.S. Census, the median size of Mankato’s urban development homes built in 2017 was over 2,400 GLOWING HEARTH along the outskirts of the city. square feet. AND HOME Salesperson Tim Hill, who joined To combat heating costs, 241 St Andrews Dr., Mankato the business in 2015, said customers Schwanke said customers are 507-345-8084 usually come to the store with an tending towards zone heating. glowhearth.com idea of what they want; he helps Fireplaces are strategically placed them navigate the growing list of in the living room, where occupants options. The continuous changes in the industry mean spend most of their waking hours. he’s constantly learning on the job. “They’re trying to heat just the area that they’re “I’ve learned a lot about fireplaces and venting, the living in,” he said. “The rest of the house gets cool like electronics of them, how they’re made and the the bedroom but a lot of people like cooler bedrooms. technical aspect of it,” Hill said. “A couple of the Once the fireplace shuts off, the furnace will turn on manufacture reps, they stopped down and spent a half and keep the rest of the house warm.” day with me going through different aspects of the While many of Schwanke’s customers are fireplaces, what each model does, the amount of heat homeowners, he’s been seeing an uptick in businesses it puts out. But for the most part its hands-on learning.” and other organizations asking Glowing Heart and While wood burning and gas powered fireplaces are Home staff to install fireplaces. common, Schwanke said fireplaces that ignite from an “We actually do quite a bit of commercial, lately a lot electrical charge are the wave of the future as federal of apartment complexes,” Schwanke said. “We’ll get regulations limiting word-burning emissions come 20 fireplaces at a time in a complex. There are so into effect next year. many different varieties and sizes of fireplaces so “Now this next year the fireplaces are going to be there’s always one to accommodate that area in the Wi-Fi ready; you can use them on your phone” home or in the apartment.” Schwanke said. Businesses and other organizations are taking During Minnesota’s cold winters when temperatures notice, discovering that customers appreciate a fire to

Profile

MN Valley Business • APRIL 2019 • 19

We believe all people should live in a safe, sustainable, and

BEAUTIFUL COMMUNITY.

Bolton-Menk.com

Electronic-start fireplaces are increasingly popular. look at while lounging with a book at Minnesota State University’s Centennial Student Union, or waiting for an appointment at the Mankato Clinic’s North Mankato location. “This is the largest fireplace I’ve ever sold, that’s 72 inches,” Schwanke said. “It’s an elongated linear fireplace. It has a flame but yet the heat actually goes up and if you look at the ceiling there’s a long louver up there, that’s where the heat escapes out. They’re just enjoying the ambience; the heat is actually staying up and going throughout the room.” Schwanke said selling and installing fireplaces goes hand in hand with construction businesses and architects. Word of mouth plays a large role in acquiring new customers, due to that cooperation with homebuilders, who give Glowing Hearth and Home referrals for people moving into newly constructed homes. He said Mankato has always been a stable market for the company, which has two other locations in Savage and Jordan. “Mankato is a hub, it’s just booming,” he said. “We’re going to keep sailing. It’s going to do nothing but just grow here.” MV

20 • APRIL 2019 • MN Valley Business

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MN Valley Business • APRIL 2019 • 21

100% OWNERSHIP. BOLD INGENUITY. DEEPER UNDERSTANDING.

Business and Industry Trends ■

Energy New power plants: natural gas and solar

ARCHITECTURE + ENGINEERING + ENVIRONMENTAL + PLANNING

www.is-grp.com

Long-term projections show that most of the electricity generating capacity additions installed in the United States through 2050 will be natural gas combined-cycle and solar photovoltaic. Onshore wind looks to be competitive in only a few regions before the legislated phase-out of the production tax credit, but it becomes competitive later in the projection period as demand increases and the cost for installing wind turbines continues to decline.

The Energy Information Administration calculates two measures that, when used together, provide an intuitive framework for understanding the capacity expansion decisions modeled for utility-scale power plants—those with a capacity rating of 1 megawatt or greater. The “levelized cost of electricity” represents the cost to build and operate a power plant, converted to a level stream of payments over the plant’s assumed financial lifetime. Installed capital costs include construction costs and financing costs. Operating costs include fuel costs (for power plants that consume fuel) and expected maintenance costs. LCOEs may also include other applicable tax credits or subsidies. The “levelized avoided cost of electricity” accounts for the

22 • APRIL 2019 • MN Valley Business

differences in the grid services each generating technology is providing (a power plant’s value) to the grid. For example, natural gas combined-cycle plants and coal plants provide dispatchable baseload services to the grid and thus have similar LACE values, even if their LCOE values differ. A generator’s avoided cost provides a proxy for the potential revenues from sales of electricity generated. As with LCOE, these revenues are converted to a level stream of payments over the plant’s assumed financial lifetime.

Oil prices stay lower

EIA forecasts Brent spot prices will average $61 a barrel this year and $62 in 2020, compared with an average of $71 in 2018. EIA expects that West Texas Intermediate (WTI) crude oil prices will average $8 lower than Brent prices in the first quarter of 2019 before the discount gradually falls to $4 in the fourth quarter of 2019 and through 2020.

Texas crude flowing

U.S. crude oil production should average 12.4 million barrels per day in 2019 and 13.2 million b/d in 2020, with most of the growth coming from the Permian region of Texas and New Mexico.

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2018 - 2019

1,171 1,033

1500 1200 900 600 300 0

Source: Sales tax figures, City of Mankato Includes restaurants, bars, telecommunications and general merchandise store sales. Excludes most clothing, grocery store sales.

Sales tax collections Mankato (In thousands)

- 2018 - 2019

$516

600

$536

500 400

Natural gas costs down

300

The federal government expects strong growth in U.S. natural gas production to put downward pressure on prices in 2019. Henry Hub natural gas spot prices should average $2.83/MMBtu in 2019, down 32 cents from the 2018 average.

200

CO2 emissions falling

Lodging tax collections Mankato/North Mankato

After rising by 2.8 percent in 2018, the government forecasts that U.S. energy-related carbon dioxide emissions will decline by 1.3 percent in 2019 and by 0.5 percent in 2020. The 2018 increase largely reflects increased weather-related natural gas consumption because of additional heating needs during a colder winter and for additional electric generation to support more cooling during a warmer summer than in 2017. Emissions should decline in 2019 and 2020 because of forecasted temperatures that will return to near normal. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, energy prices, and fuel mix.

100 0

Source: Sales tax figures, City of Mankato

- 2017 - 2018 $32,300 $45,188

70000 52500 35000 17500 0

Source: City of Mankato

Mankato food and beverage tax - 2018 - 2019 175000 140000

$63,900 $69,815

105000 70000 35000 0

Source: City of Mankato

C. Sankey

MN Valley Business • APRIL 2019 • 23

■

Agricultural Outlook

By Kent Thiesse PROGRAM DETAILS

PRICE LOSS COVERAGE ( PLC )

AG RISK COVERAGE *** COUNTY *** ( ARC-CO )

Base Price

• Crop Reference Price (RP). • Benchmark (BM) Price. • Likely RP’s for • Higher of the Reference Price 2019 and 2020: or the 5-year “Olympic” ave. n Corn = $3.70/Bu. price. n Wheat = $5.50/Bu. • Likely 2019 & 2020 n Soybeans = $8.40/Bu. BM Prices: n Corn = $3.70/Bu. n Wheat = $5.50/Bu. n Soybeans = $9.25/Bu. (2019) (2020 = $8.93 - $9.25/Bu.)

Final Price

• 12-month national market • Same as for PLC. year average (MYA) price. n Sept. 1 to Aug. 31 for corn & soybeans. n June 1 to May 31 for Wheat.

Payment Yield

• Farm Unit FSA program yields. n 2019 --- Current FSA yields. n 2020 --- Higher of Current or updated FSA yields based on 2013-2017 ave. farm yields. N/A

• County Benchmark (BM) Yields. n 5-year rolling “Olympic” ave. County yield. • Harvest yield is the final county ave. yield (RMA data).

Payment Acres

• 85 percent (.85) of Base Acres for an eligible crop.

Payment Formula

• ARC-CO Payment per • PLC Payment per Base Base Acre = Acre = Final County Revenue (Final (Ref. Price minus Final Co. yield x final MYA price) MYA Price) minus Revenue Guarantee x FSA Yield x .85 x .85 • If the final MYA price is • If the final County higher than the Ref. revenue is higher than Price, there is not a PLC the Revenue Guarantee, payment for that crop. there is not an ARC-CO payment for that crop.

Payment Revenue

• BM Revenue = County BM Yield x BM Price • Revenue Guarantee = BM revenue x .86 percent (.86)

Maxium Payment

• (Ref. Price - Nat. Loan Rate) x FSA Yield x .85

Payment Limits

• $125,000 per individual • Same as for PLC. or entity. • $900,000 max. adjusted gross income on Federal Tax Return. Details on past MYA prices, benchmark yields, and payments, etc. are available at:

(Per Crop Base Acre)

FSA Farm Programs Data & Information

• County BM Revenue x .10 x .85

www.fsa.usda.gov/arc-plc

*** Table developed by Kent Thiesse, Farm Management Analyst ***

24 • APRIL 2019 • MN Valley Business

Choices need to be made on new farm program

SDA has announced that initial farm program signup under the new Farm Bill will likely occur around Sept. 1. Even though we do not have all the official details for the farm programs under the new Farm Bill, we know that the PLC and ARC-CO programs will function very similarly to the last Farm Bill for the 2014-2018 crop years.

Commodity Details:

Program

• Eligible Producers will be able to choose between the priceonly “Price Loss Coverage” (PLC) and county yield revenue-based “Ag Risk Coverage” (ARC-CO) program choices for the 2019 and 2020 crop production years. Beginning with the 2021 crop year, producers will be able to make an annual election between the ARC-CO and PLC program choices. The farm program choice will be specific to each eligible crop, and the choice can vary from farm unit to farm unit for the same crop. • Calculation formulas, etc. for the ARC-CO program will remain similar to the current farm program.

(Refer to the adjoining Table for calculation details for PLC and ARC-CO programs.)

Agriculture/ Agribusiness

• Crop base acres will remain at current levels for all crops on most farms. Producers will have the opportunity to update their FSA farm program payment yields beginning with the 2020 crop year. Yield updates will be based on the average farm yields for the 2013 to 2017 crop years on planted acres for eligible crops, which will be factored down by 81 percent (.81) for corn and soybeans. If the updated yields are lower than current levels, producers can choose to keep their current FSA program yields. The farm program yields are used to calculate PLC payments on individual FSA farm units. n ARC-CO payments will now be based on the county where an FSA farm unit is located, rather than the county that the producer chose as the FSA administrative office (as currently exists). This was a major issue in some counties in the last Farm Bill. • The reference prices for PLC and ARC-CO 8 programs will be established at the greater of the current reference prices or 85 percent (85%) of the 6 market year average (MYA) price for the most recent five years, excluding the high and low year. 4 reference price cannot exceed 115% of the The current reference price. The current minimum 2 reference prices (and new maximum prices) are: Corn 0 = $3.70/bu. (max. = $4.26/Bu.) J F M A M J J A S O Soybeans = $8.40/bu. (max. = $9.66/Bu.)

Note - Due to lower MYA price levels in recent years, the reference prices for corn, soybeans and wheat will most likely stay 8 at the current levels for 2019 and 2020. 100 Risk Management Agency (RMA) yields that • The 6 are85used for crop insurance yield calculations will be used for determining ARC-CO payments, rather 4 than 70 National Ag Statistics Service (NASS) yields. 2

55 • Commodity (CCC) national loan rates were increased in the new Farm Bill, as follows: 400

n Corn 25 = $2.20 per bushel (currently $1.95/bu.) J F= $6.20 M AperMbushel J (currently J A S $5.00/bu.) O N D n Soybeans Note - County loan rates are adjusted, based on local grain prices and geographical price differences. 100

PLC and ARC-CO Farm Program Table

85 of the 2018 Farm Bill, most crop producers As part will need 70 to make a farm program choice between price-only Price Loss Coverage (PLC) program, or the County 55 level revenue based Ag Risk Coverage (ARCCO) program. The following Table highlights the key farm 40 program details for the PLC and ARC-CO programs for the 2019 and 2020 crop years. 25

Kent Thiesse is farm management analyst and senior vice president, MinnStar Bank, Lake Crystal. 507-381-7960); kent.thiesse@minnstarbank.com

Corn prices — southern Minnesota

(dollars per bushel)

— 2018 — 2019

8 6

$3.38

$3.27

Source: USDA

Soybean prices — southern Minnesota

(dollars per bushel)

— 2018 — 2019 8 20 100 16 6 85 $9.53 12 470 8 255 $8.03 4 40 0 0 J F M A M J J A S O N D 25 J F M A M J J A S O N D J F M A M J J A S O N D Source: USDA

Iowa-Minnesota hog prices

185 pound carcass, negotiated price, weighted average

— 2018 — 2019

20 100 25 16 85 22 12 70 19 8 55 16 4 40 13 0 J F 25 10 J F Source: J USDA F

25 22

$60.53

19 16

M M M

$46.73 A M J A M J A M J

Milk prices

J J J

A S O N D A S O N D A S O N D

Minimum prices, class 1 milk Dollars per hundredweight

— 2018 — 2019 25 22

$16.13

19 16 13 10

$13.88 J

20 25 16 22 12 19 8 16 4 13 0 J 10

Source: USDA. Based on federal milk orders. Corn and soybean prices are for rail delivery points in Southern Minnesota. Milk prices are for Upper Midwest points.

C. Sankey

MN Valley Business • APRIL 2019 • 25

Construction/Real Estate Residential building permits Mankato

Commercial building permits Mankato

- 2018 - 2019 (in thousands) $301,000 555000 $531,173

- 2018 - 2019 (in thousands) $293 $531,175 540000

462500

450000

370000

360000

277500

270000

185000

180000

92500

90000

Source: City of Mankato Information based on Multiple Listing Service and may not reflect all sales

- 2018 - 2019 (in thousands)

114

180

- 2018 - 2019 (in thousands) $157,300 $178,600

200

240

Median home sale price: Mankato region 250

300

150

122

100

120

0 J

Source: Realtors Association of Southern Minnesota

Housing starts: Mankato/North Mankato

— 2018 — 2019

- 2018 - 2019

5.5

Got water?

4.3%

Got water? 30

4.3%

3.5

Includes single family homes attached and detached, and town homes and condos

Dealer Area

4.5 4.0

Dealer Area

5.0

Source: Realtor Association of Southern Minnesota

Interest Rates: 30-year fixed-rate mortgage

3.0

Source: City of Mankato

Existing home sales: Mankato region

10 J

Source: Freddie Mac

Got water?

Got water? Read us online! 26 • APRIL 2019 • MN Valley Business

A S O N D Artfully crafted with a wide Artfully crafted with a wide range of of stone range stone and and wood wood visuals. visuals. Wonderfully Wonderfully waterproof waterproof thanks thanks to to Shaw’s LifeGuard Resilient core. Artfully crafted with a wide Artfully crafted with a wide range range of of stone stone and and wood wood visuals. visuals. Wonderfully waterproof thanks to Wonderfully waterproof thanks to Shaw’s LifeGuard Resilient core. Shaw’s LifeGuard Resilient core.

Source: Cities of Mankato/North Mankato

Dealer Area

507.625.3089

Artfully1107 crafted with a wide Cross St. | North Mankato range of stone and wood visuals. Mon.-Thurs. 9am-8pm Wonderfully waterproof thanks to • Fri. 9am-6pm Artfully1107 crafted with a wide Cross St. | North Mankato Sat. 9am-4pm Shaw’s LifeGuard Resilient core.• Closed Sun.

507.625.3089

range of stone and wood visuals. Mon.-Thurs. 9am-8pm www.rickwaycarpet.net Wonderfully waterproof thanks to • Fri. 9am-6pm Sat.Resilient 9am-4pm Shaw’s LifeGuard core.• Closed Sun.

www.rickwaycarpet.net

Gas Prices 5

Gas prices-Mankato

— 2018 — 2019

54 43 $2.35

32 21 10 0

$2.34

$42.50

+2.0%

Ameriprise

$126.66

$124.59

-1.6%

Best Buy

$59.54

$68.90

+15.7%

Brookfield Property

$18.71

$19.49

+4.2%

Crown Cork & Seal

$51.83

$54.53

+5.2%

Consolidated Comm. $10.60

$10.18

-3.9%

Fastenal

$61.73

0.0%

General Mills

$43.84

$46.84

+6.8%

Itron

$58.04

$49.73

-14.3%

Johnson Outdoors

$61.19

$67.91

+11.0%

$202.31

$206.45

+46.5%

Target

$72.38

$76.08

+5.2%

U.S. Bancorp

$57.33

$51.38

-10.4%

Winland

$1.10

0.0%

Xcel

$52.36

$55.92

+6.8%

— 2018 — 2019

21 M

$41.70

$2.35

Archer Daniels

$2.49

Percent change

March 11

Feb. 7

Gas prices-Minnesota

Stocks of local interest

0Source: GasBuddy.com J F M A

C. Sankey

MN Valley Business • APRIL 2019 • 27

Minnesota Business Updates

■

■ Target strategy paying off

■ Johnson Outdoors unveils boat

Shoppers have been flocking to Target stores as it’s implemented its strategy to introduce new brands and entice online shoppers to visit stores. Traffic to the retailer rose 4.5 percent in the final quarter of 2018, which includes the all-important holiday season, and sales increased 5.3 percent. Physical stores open at least 12 months reported a sales uptick of 2.9 percent. They’ve also done great online, with sales soaring 31 percent. Target has been taking on Amazon by leveraging its network of physical stores to enhance the online shopping experience. And in the fourth quarter, stores played a role in almost 75 percent of online sales, from delivering the packages to enabling online shoppers to come pick up their purchases. At roughly 1,000 locations, customers can drive up and have packages brought out to their cars. And online shoppers can go to any Target store and pick up purchases the same day at no extra cost.

Johnson Outdoors’ Old Town brand has unveiled a new solo canoe, the Discovery 119 Solo Sportsman. The boat features a hybrid canoe-kayak design. The company touts its fishing and hunting-specific features, simplicity and utility of a classic canoe with the agility and handling of a kayak. The craft is being marketed to anglers and waterfowl hunters.

■ Kraft Heinz faces challenges Kraft Heinz’s profit margins have fallen and its competitors have caught up with them, making them one of many big food companies struggling with slowing sales and rising costs. As its stock prices have fallen it’s lost several billion dollars in market value. Since the third quarter of 2015 Kraft’s sales have been stagnant. Other big companies, including General Mills, have struggled with changes in consumer eating habits, a desire for organic foods and a move away from processed ones.

Employment/Unemployment Initial unemployment claims Nine-county Mankato region Major January Industry 2018 2019 Construction Manufacturing Retail Services Total*

525 437 63 256 1,281

Local non-farm jobs Percent change ‘17-’18

412 253 67 173 905

129,587 139000 126000

Construction 126000 126000 Manufacturing Retail 113000 Services 113000 Total*

9,311 3,152 1,306 5,400 19,169

100000

Minnesota Local non-farm jobs

2,964 2,945

8000 3500 3500 6000 2800 2800 4000 2100 2100

150000 100000

50000

700 0

200000

2000 1400 1400

700

- 2018 - 2019

(in thousands)

-3.4% -17.4% +3.1% -7.7% -6.7%

Services consist of administration, educational, health care and social 100000 assistance, food andJ otherF miscellaneous services. M A M J J A S O 100000 J don’t F equal M total A because M Jsome Jcategories A not S listed. O N *Categories

28 • APRIL 2019 • MN Valley Business

1400 700

Percent change ‘17-’18

8,995 2,604 1,347 4,983 17,939

2100

113000

Minnesota initial unemployment claims January 2018 2019

3500

125,915

2800

-21.5% -42.1% +6.3% -32.4% -29.4%

Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don’t equal total because some categories not listed.

Major Industry 139000 139000

- 2018 - 2019

Nine-county Mankato region

F M

M A A M

M J

J J

J A

A S

S O

O N

N D

■ Roof material eats smog

■ Fastenal growth continues

3M has developed “cool roofing” granules that are activated by sunlight in a process known as photocatalysis that absorbs smog. The granules have a photocatalytic coating. Traditionally, roofing material reflect sunlight to help keep buildings cool. The material is being incorporated into shingles and is popular in California and other places that are battling to reduce smog pollution.

Fastenal Company said its February sales grew 10.5 percent year over year to $411.9 million, even though bad weather impacted sales negatively. The figure was down from 13.3 percent net sales growth in January. The sales pace is in line with the company’s expectation of double-digit growth in 2019.

■ Xcel’s aggressive on clean power

As Minnesota 3500 and other states, cities and towns set 2800 Electronics retailer Best Buy is standing up to Amazon goals for 100 126000 and thriving. 2100 percent renewable energy, critics question whether it For the fourth quarter of 2018, the company reported can actually be done, and done cost-effectively. 1400 $42.1 billion in revenue and an 11 percent dividend 113000 In Colorado, Xcel Energy said its recently announced increase. 700 goal of 80 percent reduction in carbon emissions by That’s a big turnaround from almost a decade ago 2030 can be achieved with existing technology. when Best Buy was under pressure from online giant 100000 0 Costs ofJ renewables F M A have M declined, J J A weather S O forecasts N D J Amazon, fighting for its survival. have improved, and engineers have learned how to Wall Street took notice, helping the company’s shares integrate higher and higher levels of clean power rise almost 6-fold from the 2012 lows, and trade near its without sacrificing reliability. ten-year high, according to Forbes. But for that final 20 percent of emissions-free power, Best Buy’s turnaround is the result of a smart strategy the3500 company wants to see improved storage technology. 139000 — Renew Blue – launched five years ago, which helped 3500 8000 139000 Market reforms will also be needed to better manage the 200000 the company capitalize on its two competitive 2800 grid. advantages, 6000 150000 126000scale and location, to fend off competition 2800 The 2100 company said it will also need new carbon-free 126000Amazon. from 2100 technologies not yet commercially available at the cost 4000 100000 1400 and scale required. 139000

■ Best Buy standing up to Amazon

113000

1400

700 2000

700

100000

100000 J F

J M

Employment/Unemployment

F M A A M J

M J

J A

J S

Local number of unemployed

4000 2100 1400 2000

A O

S N

O D

8000 6,276 6,489 6000

200000

J F M A M M A M J J M A M J J

J A A

J S S

A S O N O N D O N D

100000 50000 D

M MJ

J JA

J JS

A AO

S N S

O D O

N N

D D

(includes all of Blue Earth and Nicollet Counties) 200000 150000

January

100000

0 F

J M

F M A A M J

M J

J A

2018

2019

3.2% 60,413 2,002

3.4% 58,376 2,054

J S

A O

S N

O D

Unemployment rates Counties, state, nation County/area

- 2018 - 2019

124,159 132,073

150000

F M A M AJ FA M

Unemployment rate Number of non-farm jobs 50000 50000 Number of unemployed

100000

2000 0 F F

0 0 J F JM

Mankato/North Mankato Metropolitan statistical area

150000

4000

700 0 J 0 J

D 0

200000

Minnesota number of unemployed

- 2018 - 2019

Nine-county Mankato region 8000 3500 6000 2800

50000

Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan Minneapolis/St. Paul Minnesota U.S.

January 2018

January 2019

3.3% 5.4% 5.4% 7.7% 4.1% 2.9% 4.9% 6.6% 5.8% 3.4% 3.9% 4.5%

3.5% 5.9% 6.0% 7.8% 4.7% 3.2% 6.3% 5.4% 6.1% 3.6% 4.3% 4.4%

Source: Minnesota Department of Employment and Economic Development C. Sankey

Minnesota initial unemployment MN Valley Business • APRIL 2019 claims • 29

Sponsored by the Carl & Verna Schmidt Foundation

Student loan default can gut your paycheck

By Kelsey Sheehy, NerdWallet

here’s a dirty little secret of the student debt crisis. One that affects millions of borrowers, but isn’t talked about at dinner tables, on social media or in think pieces about student loans. The taboo topic is wage garnishment and it works like this: Default on your federal student loans and the government can take up to 15 percent of each paycheck to satisfy your debt. That amounts to $300 per month for someone who normally takes home $2,000 per month. The Education Department can also withhold federal benefits like tax returns and Social Security payments. Garnishment is an effective tool to recoup unpaid loans — private collection agencies enlisted by the Education Department took in over $841.6 million via wage garnishment in the 2018 fiscal year — but it inflicts serious financial strain on borrowers who are already struggling. “It’s a very powerful collection tactic that can really devastate the financial lives of the people subjected to it,” says Joanna Darcus, a staff attorney at the National Consumer Law Center who works with low-income student loan borrowers. “They can’t afford to pay their rent, buy their medicine, buy clothes for their kids and also pay a large percentage of their wages toward their student loan.” If you received notice of garnishment or are already in the thick of it, don’t panic; you have options that are far less painful than a 15 percent hit to your paycheck.

STOP GARNISHMENT BEFORE IT STARTS The ideal time to take action is when you begin struggling to make payments. At that point, your loan servicer can help you explore other repayment options, including income-based plans that cap your monthly payment. Once your loans are in default — nearly nine months past due for most federal loans — those options are off the table until your loan is in good standing. You can rehabilitate your loans to move out of default (more on that below). You also have a brief 30 • APRIL 2019 • MN Valley Business

window to consolidate your federal loans (combining them into a single loan with its own interest rate) before the Education Department, via a private collection agency, moves to garnish your wages. The collection agency handling your federal loans will notify you by mail before it starts garnishing your wages. The notice serves as your 30-day warning. During this time, you can stop the process by negotiating payment arrangements with the agency. The key: It must receive your first payment in that 30day window. If you can’t make a payment within that window, request a hearing to appeal the garnishment. To prevent garnishment from starting, you must request the hearing in writing within 30 days of the date on your collection notice. You can still file an appeal after garnishment starts, but the collection agency will continue to take up to 15 percent of your take-home pay while the case is reviewed, which can take two to three months . A hearing sounds intimidating but it’s no more than a long form detailing your income, debt and expenses. The goal is to stop or reduce garnishment. Contact the collection agency handling your loan to talk about payment arrangements or get details on a hearing request. REHABILITATE YOUR LOAN Loan rehabilitation is a one-time “Get out of default” card. Here’s how it works: The collection agency sets a monthly payment based on your income, minus any reasonable monthly expenses. The amount could be as low as $5 a month. You’ll need to provide documentation, like copies of pay stubs and bills, and complete a detailed form to help determine the amount. Any wages garnished due to defaulted student loans will be considered among your expenses. Make nine payments of the agreed-upon amount within 10 months and your loans move out of default.

Sponsored by the Carl & Verna Schmidt Foundation

Companies are also flunking retirement planning

By Liz Weston, NerdWallet

lenty has been written about American workers’ failure to plan adequately for retirement. Their employers seem to be doing an even worse job. Only 1 in 10 large employers offers a formal phasedretirement program that lets workers cut back their hours or responsibilities before they quit work entirely, according to the 2018 Longer Working Careers Survey by professional services consultant Willis Towers Watson. Fewer than 1 in 3 of the companies surveyed offered their employees the option to work part time or switch to a less demanding job, according to the survey, which polled 143 large U.S. companies that employ 2.9 million people. That’s too bad, because flexible work arrangements don’t just help people who need or want to work longer. These accommodations also could help workers who are starting families, pursuing degrees or caring for aging parents. PROGRAMS VARY WIDELY Formal phased retirement programs can take many forms. Examples cited in a 2017 report by the Government Accountability Office include: —One program that allows workers who are at least 55 years old with 10 years of service to cut their hours by 20 percent with a 20 percent cut in pay, but keep health insurance and pension accrual benefits. —Another that allows employees 60 and older with five years of service to reduce their hours by 20 percent to 50 percent, or even more if they’re willing to lose their health insurance benefit. —An employer that allows workers 55 and older with seven years of service to negotiate their own “glide path” to retirement, ramping down from full time to full retirement while retaining benefits. —Yet another company that allows any employee to switch to less stressful or complex duties or phase to part-time work, retaining health insurance if they work at least 25 hours a week. Employers that offer phased retirement typically say the plans are good for business, the GAO report found. Phased retirement allows both the company and the worker to adjust over time, rather than scrambling to deal with an abrupt departure. Businesses can plan

better since they know well in advance when an employee plans to leave, plus they can arrange for experienced workers to train or mentor younger ones, transferring years (and sometimes decades) of employer-specific knowledge. “Otherwise, years of institutional knowledge could be walking out the door,” says Susan Weinstock, vice president for financial resiliency programming at AARP. FOR EMPLOYERS, RETIREMENT CAN DRAIN TALENT AND KNOWLEDGE Most employers realize retirement is a looming issue, with 83 percent of the large employers Willis Towers Watson polled saying significant numbers of their workers are approaching retirement age. In fact, 54 percent of employers believe the loss of talent from retiring workers will be more significant than other labor market risks in the next five years, the survey found. Employers may not fully grasp, however, how many people may need to keep working because they haven’t saved enough , says retirement trends expert Catherine Collinson, CEO and president of the nonprofit Transamerica Institute and Transamerica Center for Retirement Studies. EMPLOYEES CAN BE AFRAID TO ASK Another disconnect: Employers often think their employees aren’t interested in more flexible schedules or phased retirements, because workers haven’t asked. But employees may be afraid to inquire, lest they seem less than gung-ho about their jobs or get shoved out the door before they’re ready, Collinson says. “Employees may not want to tip their hands,” she says. Flexible schedules and phased retirements aren’t panaceas, of course. For many, continuing to work simply won’t be an option. The Employee Benefit Research Institute found that nearly half of workers retired earlier than they expected for reasons that included layoffs, health issues or the need to care for someone else. MV

MN Valley Business • APRIL 2019 • 31

INVEST IN SUCCESS BECOME A YOUNG PROFESSIONAL

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32 • APRIL 2019 • MN Valley Business

Thank you for joining us at the Greater Mankato Growth, Inc. Annual Meeting

Greater Mankato Growth, Visit Mankato, City Center Partnership and GreenSeam would like to thank everyone for joining us for a successful Annual Meeting on March 12. We are proud to be able to celebrate our collective accomplishments from the past year, share our organization’s goals for the future, congratulate our 2018 volunteers and honor Jonathan Zierdt on his 15 years at Greater Mankato Growth with you. We want to give a special thanks to our 2019 sponsors as well as our outgoing board members. To our incoming board members, we welcome you! For photos and videos go to: greatermankato.com/annual-meeting

WHY JOIN

GREATER MANKATO Congratulations to the 2018 Volunteers of the Year GROWTH? EXPOSURE

Build your Brand; grow your business. Stand out and get noticed! Nancy Lori Zallek Benike

NETWORKING TW WORKING ORKING It’s not just st WHO WHO you ou know, it’s who knows k Heather Gary YOU. Clark Networking KochIS Powerful.

A special THANK YOU to our event sponsors! Presenting Sponsors

LEARNING

Gain access cces to Member Exclusive Content Dinner Sponsor to help grow your business.

TALENT RETENTION

Keep your employees engaged and retained with access to our member only events and programs.

MEMBER EXCLUSIVE BENEFITS Reception Sponsor

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Receive our member only emails making you the first to Speaker Sponsor know the latest news.

REFERRALS We only refer member businesses. Word of mouth and direct referrals come from being a valued member of GMG.

LEADERSHIP Training with a COMMUNITY Focus

SHAPE YOUR Form newCREDIBILITY personal and professional relationships while Raise your business, reputation by exploring relevant social and community topics COMMUNITY belonging. Research shows

Your investment helps us the nine-month-long Greater Mankato Leadership during that businesses who belong continue to build theInstitute best program. Apply for the 2019-20 class by June 1. to a chamber of commerce environment for your business and its employees. are more successful.

For more information or to apply visit greatermankato.com/leadership

JOIN US FOR A GREATER MANKATO LEADERSHIP INSTITUTE SPEAKER SERIES SPECIAL EVENT: greatermankato.com/join “The Champion’s Code: Building Relationships Through Life Lessons of Integrity & April 2018 Accountability from the Sports World to the Business World” with Ross Bernstein

Thursday, April 11 • 8:00 - 11:30 am • Country Inn & Suites For more information or to register visit greatermankato.com/leadership

MN Valley Business • APRIL 2019 • 33 greatermankato.com/join

2019

2019 SPONSOR:

5 - 7 PM

JAN 8 FEB 5 MAR 5

APR 2

AmericInn Hotel & Conference Center

JUL 9

U.S. Bank

Laurels Edge Assisted Living

AUG 6

Pantheon Computers

240 Stadium Road, Mankato 77 Stadium Road, Mankato

BankVista

1501 Adams Street, Mankato

Carlson-Tillisch Eye Clinic

120 North Broad Street, Mankato

115 East Hickory Street, Suite 200, Mankato 1 Civic Center Plaza, Mankato

SEPT 3

Mankato Clinic - North Mankato Family Medicine

OCT 1

Hilton Garden Inn

1575 Lookout Drive, North Mankato 20 Civic Center Plaza, Mankato

MAY 7

Courtyard by Marriott Hotel & Event Center NOV 5

Mayo Clinic Health System

JUN 4

Dotson Iron Castings

Exclusively Diamonds

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DEC 3

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1601 Adams Street, Mankato

NOTE: Calendar magnets are available at the check in table at each Business After Hours event and they are available at our office at 3 Civic Center Plaza, Suite 100. Also, a downloadable version is available at greatermankato.com/business-after-hours.

2019 February Business After Hours hosted by Laurels Edge Assisted Living

Business After Hours gives representatives from Greater Mankato Growth member businesses at the Engaged Level or higher an opportunity to get together with one another to exchange ideas and learn about each other’s businesses. For more information on these and other member events, visit greatermankato.com/events.

NEW SCHEDULE NEW URBAN COURSES This year marks the 10th anniversary for the Mankato Marathon and with it comes many changes for the marquee event. Visit Mankato and the Mankato Marathon recently unveiled a new urban course highlighting the beautiful Minnesota River Valley. To learn more about the Mankato Marathon visit mankatomarathon.com. OCT. 18-19, 2019

34 • APRIL 2019 • MN Valley Business

NEW BUSINESS

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Cups & Needles Acupuncture, LLC 1351 Madison Avenue Suite F/Suite 206, Mankato

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BE IN THE KNOW Receive our member only emails making you the first to know the latest news. Optivus Physical Therapy, LLC 1681 Commerce Drive, North Mankato

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We only refer member businesses. Word of mouth and direct referrals come from being a valued member of GMG.

SHAPE SimplyYOUR Delicious CREDIBILITYSkinner Family Dentistry 12 Civic Center Plaza, Suite 1684, Mankato 201 North Broad Street, Suite 204, Mankato Raise your reputation by COMMUNITY belonging. Research shows

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NEW Sculptures coming to the City Center on MAY 11

n Saturday, April 20, CityArt volunteers will begin taking down the 2018 Walking Sculpture Tour to make way for the 2019 sculptures. Many of the artworks will move on to sculpture walks in other cities; a few have been purchased and will move to their new Greater Mankato homes. The bases will only be empty for a few weeks; on Saturday, May 11 twenty-seven new sculptures will be unveiled in the City Center! Learn more about the Walking Sculpture Tour and other CityArt initiatives at cityartmankato.com.

greatermankato.com/join April 2018

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MN Valley Business • APRIL 2019 • 35 greatermankato.com/join

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EW Y N YO OR RK K SSTTUUDDYY TTOOUURR by Madeline Oines, Marketing Assistant by Madeline Oines, Marketing Assistant

experiences Every year, year, the the College CollegeofofBusiness Businessoffers offersour ourstudents studentsreal-world real-world experiences through the this, is is through through the courses coursesand andprograms programswe weprovide. provide.One Oneway waywewedodo this, through the annual prothe annual New New York YorkCity Citytrip, trip,MRKT MRKT492 492Study StudyTour, Tour,led ledbybyMarketing Marketing professors Drs. Ann Kuzma and Kevin Elliot. For the first time, this year’s trip was fessors Drs. Ann Kuzma and Kevin Elliot. For the first time, this year’s trip was organized and Not organized and orchestrated orchestratedthrough throughaathird thirdparty partyprovider, provider,WorldStrides. WorldStrides. Not only does this trip take our students on the adventure of a lifetime, but introduconly does this trip take our students on the adventure of a lifetime, but introduces them York City. es them to to real real world worldmarketing marketingcompanies companiesand andbusinesses businessesininNew New York City. companies like to to visit, companiesthat thatwewewould would like visit, and also whether we could find any and also whether we could find any NYC companies with a COB connecNYC companies with a COB connection.” Students having the opportunity tion.” Students having the opportunity to see a former College of Business to see a former College of Business student working in the Big Apple, is student working in the Big Apple, is an inspiration, as they can begin to see an inspiration, as they can begin to see what their futures may hold. what their futures may hold.

Photo by Jake Hoffman Photo by Jake Hoffman

As Kayla reflected on her experience got to catch the ferry to Ellis Island As what Kaylaitreflected herfuture experience to in catch ferry Island and meant foronher career andgot take the the beauty ofto theEllis Statue of what it meant for her future career and take in the beauty of the Statue of inand marketing, she learned many facets Liberty. You cannot go to New York marketing, learned manywords, facets City Liberty. You cannot go to New ofinthe marketingshe field. In Kayla’s without being immersed into York the of the marketing field.me InaKayla’s City without being immersed into the “The J. Crew visit gave better words, different cultures of food all around “TheofJ. retail Crewmarketing, visit gave me a better different cultures food all sense MKG taught you. Kayla says “The of amount of around difsense of experiential retail marketing, MKGand taught ferent you.food Kayla says “The amount of difme about marketing surrounding you is almost me about experiential ferent food surrounding you is almost what that meant, WABCmarketing showed us and overwhelming, from an amazing New what that meant, WABC showed us overwhelming, from an amazing more on the digital marketing side of York slice of pizza to a nice Italian New more on the digital marketing side of things, and HAVAS focused primarily York slice pizza toEataly, a nicethe Italian meal from theofpopular things, and HAVAS focused primarily on pharmaceutical advertising. Every meal were from endless. the popular the options ” ThisEataly, was a once on pharmaceutical Every in options company visit taught advertising. me something endless.”for This was a once a lifetimewere opportunity many, company visit taughtanother me something different and explored side of in a lifetime opportunity for many, bundled with real world experiences marketing. different ”and explored another side of andbundled memories that will stickexperiences forever. with real world marketing.” Toand learnmemories more about COB visit thatthe will stick forever. While this trip included a lot of learncob.mnsu.edu To learn more about the COB visit ing and networking, that’s not While this trip included a lottoofsay learncob.mnsu.edu they ing didn’t and networking, that’s not to say have fair theytheir didn’t share fun.fair haveoftheir Students share ofgot fun. toStudents go to twogot Broadway to go to two shows includBroadway ing, Wicked shows includand ing,Chicago, Wicked asand wellChicago, as take on the finanas well as take cial district of on the finanWall Street. cial district of They also Wall Street. They also

Minnesota State University, Mankato College of Business Minnesota State University, Mankato College of Business

During this During this 6-day 6-daytrip, trip,our ourstudents students are also gaining 3 credits are also gaining 3 creditstowards towardstheir their degree and graduation. These students degree and graduation. These students gain knowledge and insights into what gain knowledge and insights into what it is like in the real marketing world it is like in the real marketing world and see how these companies are run and see how these companies are run day to day. Kayla Rogeberg, a junior day to day. Kayla Rogeberg, a junior marketing major, participated in this marketing major, participated this year’s New York study tour and in says, year’s New York study tour and says, “This business focused study tour in “This business focused study tour New York City was hands down thein New York City was hands down the best class I have taken at Minnesota best class I have taken at Minnesota State University, Mankato. ThroughState University, Throughout the span of 7 Mankato. days, we partook in out the the span of 7 days, we partook behind scenes business tours andin behind theBig scenes business toursThe and saw all the Apple has to offer. saw all theand Big real-world Apple has experiences to offer. The memories memories experiences throughoutand thisreal-world trip are something throughout this trip are something I will take with me for a long time. ILearning will takeout with a long time. of me the for classroom and in Learning out of the classroom in the real world has been the mostand influthe real world hascollege been the most ential part of my career so influfar.” ential part of my college career so far.” The New York City trip gives students the opportunity to go ongives compaThe New York City trip students ny tours of marketing the opportunity to go corporations on compathroughout the city. This year, stuny tours of marketing corporations dents had thethe chance to visit J. Crew, throughout city. This year, stuMKG,had WABC-7 Eyewitness and dents the chance to visitNews J. Crew, HAVAS Media. HAVAS Media was an MKG, WABC-7 Eyewitness News and especially significant company tour HAVAS Media. HAVAS Media wason an this trip, due to the fact that it was ledon especially significant company tour by Ryan a College this trip,Phippen, due to the fact thatofitBusiness was led Alum from Minnesota State Univerby Ryan Phippen, a College of Business sity, Mankato who graduated in 2003 Alum from Minnesota State Univerwith a degree in marketing. Dr. sity, Mankato who graduated inKuzma 2003 says “Not long after Dr. Elliott and I with a degree in marketing. Dr. Kuzma decided to take on the roles of faculty says “Not long after Dr. Elliott and I leaders for the New York City Study decided to take on the roles of faculty Tour, we began to research the types of leaders for the New York City Study Tour, we began to research the types of

Photo by Jake Hoffman

Photo Jake Business Hoffman • APRIL 2019 • 37 MNbyValley

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