A good year for local business Strong 2011, promising 2012
Also in this Issue: • Branding your integrity • Frozen Yogurt Creations • Ryan Schmitz, Creative Closets
JANUARY 2012 • Volume 4, Issue 5
■
18
Special Focus
■
A company that can be trusted will rise above competitors, gain loyal customers and attract new customers. In order to gain trust in a competitive marketplace, businesses must demonstrate brand integrity.
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30
Greater Mankato Growth If you’re in business, there’s an important reason to get involved in public policy — it impacts you. Policy shifts can affect everything from the way you do business to your bottom line.
22
A look back, a look ahead The year just past was a good one by virtually every business measure. The Mankato area finished considerably stronger in 2011 than the year before and there is optimism about the year ahead.
■
42
Profile: Ryan Schmitz
When winter hits southern Minnesota, Ryan Schmitz’s landscaping business slows down. He responded by starting another business, Creative Closets, where he can design and install organization systems.
MN Valley Business • JANUARY 2012 • 3
Features
F E A T U R E S
D E P A R T M E N T S ■
From the Editor................................. 6
■
Business informer............................. 8
■
Joe Spear: Greater growth in Greater Mankato ■
Vehicle, retail, construction trends in the area ■
Public policy decisions impact all businesses
Departments
Construction, real estate trends.....11 Building permits, housing starts, home prices, interest rates.
■
■
Retail trends....................................12
■
■
■
■
■
Agriculture Outlook.........................14
■
Agribusiness trends........................15
■
Business updates............................16
■
Area commodity prices
Best buy profits down, Hutchinson Technology denied property tax rebate, and more
Greater Mankato Growth Convention and Visitors Bureau ....33 Bringing money to town through events, tournaments and conventions
Auto sales, retail sales and hotel business
Kent Thiesse: Farm income setting records
Greater Mankato Growth Business Activities..........................29 Groundbreakings, new businesses, relocations and expansions
Job trends.......................................10 Regional, state unemployment information
■
Greater Mankato Growth................28
Regional Outlook.............................34 Jack M. Geller: Where did the surplus come from?
Up & Coming...................................36 Julie Marie’s All in the Family..............................40 The Milbrandt family’s Frozen Yogurt Creations
Business memos/ Company news................................44 Keep up on who’s moving up, what’s new
Business Commentary....................20 Sheri Allen: School-business partnership important
A good year for local business Strong 2011, promising 2012
Also in this Issue:
On the Cover: Shoppers were ready to open their pocketbooks and local retailers report a strong year in 2011.
• Branding your integrity • Frozen Yogurt Creations • Ryan Schmitz, Creative Closets
Photo By Pat Christman
4 • JANUARY 2012 • MN Valley Business
Good morning Mankato! We’re happy to be here. We may be new to Mankato, but we’ve been around Minnesota for a long time. So you can expect big things from us. Like building area businesses, and a healthier community together. Stop by for a cup of coffee and say hello.
1290 Raintree Road, MankBUP t BANK t #remer.com Member FDIC. Š 2011 Bremer Financial Corporation. All rights reserved.
Greater growth in Greater Mankato JANUARY 2012 • VOLUME 4, ISSUE 5 PUBLISHER
James P. Santori
EXECUTIVE EDITOR
Joe Spear
ASSOCIATE EDITOR
Tim Krohn
CONTRIBUTING WRITERS
PHOTOGRAPHERS
From the Editor
GRAPHIC DESIGNER
Sheri Allen Jack M. Geller Sara Gilbert-Frederick Tim Krohn Jane Laskey Jean Lundquist Kent Thiesse Marie Wood Pat Christman John Cross Jenny Malmanger
PAGE DESIGNER
Tricia Gieseke
ADVERTISING MANAGER
David Habrat
ADVERTISING SALES
Cheryl Olson
ADVERTISING ASSISTANT
Barb Wass
ADVERTISING DESIGNERS
Seth Glaser Sue Hammar Tony Helget Liz Klukas Christina Sankey
CIRCULATION DIRECTOR
Denise Zernechel
MN Valley Business is published monthly at 418 South Second St., Mankato, MN., 56001. To subscribe, call 1-800-657-4662 or 507-625-4451. $19.95 for 12 issues. For editorial inquiries, call Tim Krohn at 344-6383, or e-mail tkrohn@mankatofreepress.com. For advertising, call Cheryl Olson at 344-6390, or e-mail mankatomag@mankatofreepress.com.
T
he Greater Mankato region’s economic growth has been the biggest economic news story of the year. The big news is good news. The report by the University of Minnesota Center for Urban and Regional Affairs that put Mankato at the top of the list for growing regional centers only confirmed what a lot of us suspected. Using 2009 data, the center reported retail and service had grown an “astounding” 123 percent since 1990, beating closest rival St. Cloud which had a 42 percent growth rate. Average retail sales per person also was by far the highest of any regional center at $17,153 with the closest being Rochester and Duluth at about $10,900. The Mankato region has always been a steady-but-sure kind of growth market. While places like St. Cloud and Rochester were booming in the late 1980s and early 1990s, Mankato was holding its own, but growing fairly slowly in terms of population and business. We’ve never had a real major employer that had frequent boom and bust cycles. Even though Taylor Corp. is not as big an employer as it once was, the downsizing of it and other companies seemed to be spread out over time without massive layoffs at any given time. That’s different with places like St. Cloud and Hutchinson and even Rochester. St. Cloud had the large employer of Frigidaire/Electrolux that went through strikes and boom and bust cycles. Hutchinson really hitched its economic wagon to Hutchinson Technology for years and has really been hit in the last couple of years with massive layoffs that have the potential to change the character of the town. Mankato, some will remember, was actually a finalist in the mid-1990s for a Hutchinson Technology plant that was eventually built in Eau Claire, Wis. So, we’ve slowly moved along with homegrown businesses like Kato Engineering, Katolight, Jones Metal Products, Southern Minnesota Construction and others. Some, indeed, have been purchased by out-oftown owners now, but many of them still remain relatively stable and growing. There have been efforts over the years for local economic development organizations, whether they were Valley Industrial Development Corp, or it’s modern day version Greater Mankato Growth, that have always tried to help local companies grow while still being attractive to outside companies.
6 • JANUARY 2012 • MN Valley Business
By Joe Spear Our consumer economy has boomed with the growth of higher income jobs that have developed with our major higher educational institutions and our regional medical centers. And finally, we have to look to agriculture and agribusiness. The region has hundreds of small businesses known as farms. We have significant processing operations for farmers to sell their products and sell them easily based on timing and the market. Soybean plants and ethanol plants as well as a huge regional hog industry keep demand and prices for local corn and soybeans high. If you look at Blue Earth and Nicollet counties, we have a good mix of employers. We have about 36 percent manufacturing, construction and primary industries, about 53 percent professional and service and about 11 percent retail. We also can’t forget about a community’s collective attitude about itself. It’s not easily defined, but it essentially comes from a collective belief that you can get ahead here, you can find decent paying jobs, move up in your job, and raise kids in a community that has a great education system and is relatively safe. Government is responsive. People are generally upbeat. People have information sources, like newspapers and magazines, that keep them informed and let them know what problems need fixing. All such things matter in the success of a vibrant and healthy community. MV Joe Spear is executive editor of Minnesota Valley Business. Contact him at jspear@mankatofreepress.com or 344-6382.
■
Business Informer
Construction Year-end construction strong Construction activity was fairly strong in Mankato and North Mankato in November of last year. Mankato issued $8.6 million in residential building permits, more than double a year earlier. The start of a new multi-family housing complex on Sibley Parkway was a big chunk of that total. North Mankato issued $1 million in residential building permits, down from $1.3 million a year earlier. Mankato had $1.3 million in commercial building permits in November, more than double a year early. North Mankato issued $42,000 in commercial building permits, compared to zero a year earlier.
■■■
Energy Warm start to heating season The warm start to this heating season has lowered the forecast of average household heating expenditures for heating fuels by about 3 percent from last month’s outlook. The federal Energy Information Administration says the average household heating oil and propane expenditures are now expected to increase by 8 percent and 5 percent, respectively, this winter compared with last winter. In contrast, natural gas expenditures are projected to decline by 3 percent while electricity expenditures are 2 percent lower than last year’s levels.
Gas prices 50 cents below peak National monthly average regular-grade gasoline retail prices in November 2011 averaged $3.38 per gallon, 52 cents per gallon below their 2011 peak monthly average in May. The government expects that gasoline pump prices will remain at or below current levels until early spring 2012, when prices begin their normal seasonal rise. Projected regular gasoline retail prices should average $3.45 per gallon in 2012.
Natural gas inventories high Natural gas working inventories ended November 2011 at a record high for that date, about 1 percent above the same time last year. The projected Henry Hub natural gas spot price averages $4.02 per million British thermal units (MMBtu) in 2011, $0.37 per MMBtu lower than the 2010 average. EIA expects that Henry Hub spot prices will continue to decline in 2012, averaging $3.70 per MMBtu.
8 • JANUARY 2012 • MN Valley Business
Fuel use falls Projected total U.S. liquid fuels consumption in 2011 is expected to fall by 260 thousand bbl/d (1.4 percent) from 2010. Motor gasoline consumption accounts for most of the projected decline for the year, shrinking by 230 thousand barrels per day (2.6 percent). The government expects total liquid fuels consumption to increase by 120 thousand barrels per day (0.6 percent) to 19 million barrels per ay in 2012.
Crude oil prices The government has revised the projected oil price paths upward from last month’s outlook, particularly for West Texas Intermediate crude oil. The average refiner acquisition cost for crude oil will average $102 per barrel in 2012, slightly higher than the projection of $100 per barrel in last month’s outlook. The WTI price will average $98 per barrel in 2012, well above the $91 per barrel forecast in the previous report.
Renewables grow 11 percent Led by a 23-percent increase in conventional hydropower, the total supply of renewables is projected to grow by about 11 percent from 2010 to 2011. EIA expects total renewable energy supply to decline by 1.4 percent in 2012 as a 12-percent decline in hydropower offsets growth in other renewable energy supplies. Wind energy is projected to grow by 22 percent from 2010 to 2011, but in 2012 growth is projected to slow to 13 percent with the expiration of the production tax credits. Ethanol production growth, which averaged 120 thousand barrels per day each year between 2005 and 2010, is expected to slow to 40 thousand barrels in 2011 and 10 thousand barrels in 2012, reaching an average of 920 thousand barrels per day in 2012.
CO2 emissions to fall EIA estimates that CO2 emissions from fossil fuels were 5.62 billion metric tons in 2010, a 3.9 percent increase from the prior year. Forecast fossil fuel CO2 emissions fall by an average 0.7 percent in 2011 and 2012, as increasing emissions from higher natural gas consumption in both years are offset by declines in coal emissions.
507-387-9271
507-387-9260
Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company. Š2010 Wells Fargo Advisors, LLC. All rights reserved. 1110-4255 [74027-v2] A1356
keep them healthy and happy. occupational medicine services Mankato Clinic Urgent Care @ Adams Street is your provider of Occupational Medicine Services. Our staff will collaborate with you to help manage risk factors, keep your employees healthy and happy and get them back to work quickly and safely after an injury. No appointment is necessary for most examinations. Just walk in for prompt, professional service. For additional information call 507-385-4075 or visit www.mankatoclinic.com
Urgent Care Hours of Operation: Monday - Friday from 8 a.m. - 8 p.m. Saturday from 8 a.m. - 5 p.m. Sunday 11 a.m. - 5 p.m.
Initial unemployment claims
Minnesota initial unemployment claims
Business Barometers
Nine-county Mankato region
Major industry
November ’10 ’11
Construction Manufacturing Retail Services Total*
794 254 95 360 1,503
Percent change ’10-’11
624 183 57 309 1,173
-21.4% -28% -40% -14.1% -21.9%
2010
2011
130,000
Minnesota non-farm jobs
2,000
110,000
1,000
M
A
M
J
J
A
Local number of unemployed
S
O
N
2010
Nine-county Mankato region
D
2011
0
J
F
2010 2,805.3 2,757.7
M
A
M
J
J
A
2011
S
O
N
D
154,587 208,438
250,000
11,000
2011
Minnesota number of unemployed 2010
6,270 7,944
12,000
225,000
10,000 9,000
200,000
8,000
175,000
7,000 6,000
-19.3% -24% -7.5% -15.2% -19%
3,000
120,000
F
10,499 3,685 1,967 8,781 24,932
(in thousands)
127,868 121,146
J
13,014 4,847 2,383 10,360 30,604
Percent change ’10-’11
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.
Nine-county Mankato region
100,000
November ’10 ’11
Construction Manufacturing Retail Services Total*
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.
Local non-farm jobs
Major industry
J
F
M
A
M
J
J
A
S
O
N
November
2010
Unemployment rate
5.3%
4.0%
55,452
57,280
3,158
2,412
2011
Source: Minnesota Department of Employment and Economic Development
10 • JANUARY 2012 • MN Valley Business
J
F
M
County/area
(includes all of Blue Earth and Nicollet Counties)
Number of unemployed
150,000
A
Unemployment rates
Mankato/North Mankato Metropolitan statistical area
Number of non-farm jobs
D
Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan Minneapolis/St. Paul Minnesota U.S.
M
J
J
A
S
O
N
D
Counties, state, nation November 2010 November 2011 5.4% 5.5% 7.8% 8.0% 6.3% 5.3% 5.9% 6.6% 6.6% 6.6% 6.6% 9.3%
4.1% 4.6% 5.3% 6.2% 5.1% 4.0% 4.8% 4.9% 5.3% 5.1% 5.2% 8.2% J. Malmanger
Residential building permits Mankato 2010
$10,000
$1,000
$2,000 J
F
M
A
M
J
J
A
S
O
N
D
Source: City of Mankato
$0
J
F
M
A
M
J
J
A
S
O
N
D
Source: City of North Mankato
Existing home sales: Mankato region 2010
2011
250
Information based on Multiple Listing Service and may not reflect all sales
89 105
200
Housing starts: Mankato/North Mankato 2010
Includes single family homes attached and detached, and townhomes and condos
2011
40
9 5
30
150
20
100
10
50 J
F
M
A
M
J
J
A
S
O
N
D
Commercial building permits Mankato 2010
$10,000
(in thousands) $1,266 $489.7
2011
0
J
F
M
A
M
J
J
A
S
O
N
D
Source: Cities of Mankato/North Mankato
Source: Realtors Association of Southern Minnesota
$8,000
Commercial building permits North Mankato (in thousands) $12,000
2010
2011
$41.9 $0
$9,000
$6,000
$6,000
$4,000
$3,000
$2,000 J
F
M
A
M
J
J
A
S
O
N
D
2010
County
2011 4.4%
5.0% 4.5%
4.0% J
F
M
Source: Freddie Mac
J
F
Foreclosures:
Interest rates: 30-year fixed-rate mortgage 5.5%
$0
M
A
M
J
J
A
S
O
N
D
Source: City of North Mankato
Source: City of Mankato
4.0%
$5,000
$1,021.9 $1,291.3
2011
$2,000
$4,000
$0
2010
$3,000
$6,000
0
(in thousands)
$4,000
$8,000
$0
Residential building permits North Mankato
A
M
J
J
A
S
O
N
D
Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan
Second quarter 2010 2011 40 7 10 45 13 15 21 16 7
48 10 8 32 13 17 14 10 4
Percent change +20% +43% -20% -29% 0% +13% -33% -36% -43%
Source: Minnesota Foreclosure Partners Council J. Malmanger
MN Valley Business • JANUARY 2012 • 11
Business Barometers
$12,000
(in thousands) $8,618.7 $3,580.8
2011
Vehicle sales 2010 1,200
Business Barometers
Sales tax collections
Mankato — Number of vehicles sold 767 2011 876
$500
1,000
$393.7 $447.5
$400
800
$300
600 400
$200
200
$100
0
Includes restaurants, bars, telecommunications and general merchandise store sales. Excludes most clothing, grocery store sales.
Mankato 2010 2011
(In thousands)
J
F
M
A
M
J
J
A
S
O
N
$0
D
Source: Sales tax figures, City of Mankato
Lodging tax collections 2010
$40,000
2011
F
M
A
M
J
J
A
S
O
Mankato food and beverage tax
Mankato/North Mankato $37,330 $39,255
2010
$60,000
N
D
$46,325 $52,968
2011
$50,000
$30,000
$40,000
$20,000
$30,000 $20,000
$10,000 $0
J
Source: Sales tax figures, City of Mankato
$10,000 J
F
M
A
M
J
J
A
S
O
N
D
Source: City of Mankato
$0
J
F
M
A
M
J
J
A
S
O
N
D
Source: City of Mankato J. Malmanger
Stocks of local interest
Nov. 14
Dec. 12
Archer Daniels
$29.23
$28.65
-2%
Ameriprise
$46.04
$42.26
-8.2%
Best Buy
$27.59
$24.85
-9.9%
$3.00
Crown Cork & Seal
$32.39
$32.55
+0.5%
$2.00
Fastenal
$40.82
$41.29
+1.2%
General Growth
$14.15
$14.00
-1%
General Mills
$39.31
$40.15
+2.1%
HickoryTech
$10.48
$10.38
-0.9%
$1.70
$1.71
+0.6%
Itron
$36.14
$36.04
-0.3%
Johnson Outdoors
$15.18
$16.15
+6.4%
3M
$81.21
$81.07
-0.2%
Target
$52.71
$53.46
+1.4%
U.S. Bancorp
$25.26
$26.27
+4%
Wells Financial
$17.10
$15.00
-12.3%
Winland
$0.44
$0.38
-13.6%
$25.97
$26.07
+0.4%
Hutchinson Technology
Xcel
Percent change
Gas prices-Mankato 2011
2010
$4.00
$3.19
$2.95
$1.00 $0
J
F
M
A
M
J
J
A
S
O
N
D
Gas prices-Minnesota 2011
2010
$4.00
$3.22
$3.00 $2.00
$2.92
$1.00 $0
J
F
M
A
M
J
J
A
S
O
N
D
J. Malmanger Source: GasBuddy.com
12 • JANUARY 2012 • MN Valley Business
J. Malmanger
there for
you
Tom Evensvold
Steve Olson
Mark David Thompson Monson
Many have trusted MinnStar Bank’s personal service to help them build and grow their businesses—and we can do the same for you. Downtown Mankato 507-625-6816 Lake Crystal 507-726-2137 Good Thunder 507-278-3630
BUSINESS BANKING
www.minnstarbank.com Member FDIC
U.S. farm income setting records
Agricultural Outlook
T
he USDA’s Economic Research Service is projecting net farm income to be up 28 percent in 2011, as compared to 2010. Total net farm income is estimated at $100.9 billion, which is an increase of $21.8 billion, and well above the 2009 figure of $62.2 billion. The 2011 figure is the highest in history, topping the previous record of $90.8 billion in 2008. All of the top five farm earnings years have occurred in the past decade. Meanwhile, USDA is projecting the total net cash income to be up about 19 percent in 2011, as compared to 2010 levels. The 2011 net cash income for farmers is estimated at a record level of $109.8 billion. Cash income is based solely on the earnings generated from crop and livestock sales that occurred during 2011, minus the cash expenses during the year; while the net farm income is adjusted for values of farm inventories, and other farm balance sheet adjustments. Net cash income measures the solvency of a farm business, or the ability to pay bills and make payments on debt, while net farm income measures the increase in wealth from crop and livestock production. Both total net and cash farm incomes are expected to exceed $100 billion for the first time ever in 2011.
Other highlights from 2011:
• In the past decade total gross farm receipts have increased from approximately $250 billion in 2001, to about $275 billion in 2006, to nearly $425 billion in 2011. • In the past decade total farm production expenses have increased from approximately $175 billion in 2001, to about $225 billion in 2006, to an estimated $320 billion in 2011. • Total crop receipts in 2011 are expected to increase by 16 percent in 2011, compared to 2010 crop receipts, and are expected to top $200 billion for the first time ever. • Total livestock receipts in 2011 are expected to increase by 17 percent above 2010 levels, with new highs for beef cattle, dairy, and hogs. • Total exports of red meats will likely reach a new high in 2011, lead by a 27 percent increase in beef exports, and significant increases in pork exports to China and Japan. • Total 2011 corn sales are expected to reach 10.3 billion bushels at an average price of $6.04 per bushel; total 2011 soybean sales near 2.9 billion bushels with an
■ “The farm
income situation looks to remain quite solid for 2012, however, it may be difficult to match the projected high levels estimated for 2011.”
By Kent Thiesse average price of $12.89 per bushel, and 2011 wheat sales at 1.9 billion bushels with and average price of $7.43 per bushel.
Farm expenses
Farm expenses are expected reach a new record level of $320 billion in 2011, which represents an increase of 12 percent. After being at a record high level in 2008, total farm expenses in 2009 declined by nearly $12 billion or 4.1 percent, which was the first decline in over two decades. The rather large increase in total farm expenses for 2011 was driven by significant increases in feed, fertilizer, and fuel expenses, along with moderate increases in seed, repair, and miscellaneous expenses, as well as a fairly large increase in land cash rental rates. Total crop production expenses are expected to increase by 14.7 percent from 2010 to 2011, with a 28 percent increase in fertilizer costs, a 27 percent increase in fuel costs, and about a $1.1 billion increase in seed costs. Total livestock production expenses are expected to increase by 18.5 percent from 2010 to 2011, with a 23 percent increase in feed costs, and a 18 percent increase in the cost of feeder livestock. The land rent expense is expected to increase by $1.5 billion or 12 percent for 2011.
Strong farm balance sheets
The total value of farm assets, both real estate and non-real estate, are expected to be $2.34 trillion at the end of 2011, which is an increase of 6.8 percent. Total farm business debt is expected to
14 • JANUARY 2012 • MN Valley Business
drop from $246.9 billion in 2010 to $242.5 billion by the end of 2011. The increase in equity has been primarily due to increased farm real estate values, and reductions in farm debt levels.
Coming year looks strong
The farm income situation looks to remain quite solid for 2012, however, it may be difficult to match the projected high levels estimated for 2011. Preliminary 2012 crop budgets are projecting some moderate increases in farm expenses for seed, fertilizer, and fuel, as well as sharp increases in land rental costs. Anticipated 2012 crop prices have declined considerably in the past couple of months, which could also lead to lower farm income expectations for 2012. If there are crop production problems in 2012, crop prices could again surge due to the fairly tight U.S. and global supply of most grains. Profit margins for livestock production continue to look favorable for 2012, due to moderating feed costs and strong market prices resulting from good demand, tight supplies, and strong export markets. However, any sharp increases in feed costs or slowing of export demand could temper the livestock sector profitability in the coming year. MV Kent Thiesse is a farm management analyst and vice president, MinnStar Bank, Lake Crystal. He can be reached at (507) 381-7960) or kent.thiesse@minnstarbank.com
Corn prices — southern Minnesota 2011
2010
$8.00
(dollars per bushel) $6.57
(dollars per bushel)
2011
2010
$14.00
$12.48
$12.00
$4.00
$11.00 $10.00
$5.49
$2.00
$10.58
$9.00 J
F
M
A
M
J
J
A
S
O
N
D
Source: USDA
M
A
M
J
J
A
S
O
N
D
$80.00
$18.00
$60.00
$16.00
$50.00
$14.00
F
M
A
M
J
J
A
S
O
N
$20.25
$22.00 $20.00
$67.32
$70.00
Minimum prices, class I milk Dollars per hundredweight
2011
2010
$24.00
$81.31
$90.00
J
F
Milk prices
185 pound carcass, negotiated price, weighted average
2011
2010
Source: USDA
J
Source: USDA
Iowa-Minnesota hog prices $100.00
$8.00
D
$19.04 J
F
M
A
M
J
J
A
S
O
N
D
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.
J. Malmanger
Business Barometers
$13.00
$6.00
$0
Soybean prices — southern Minnesota
Updates: Business news, local relevance
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■ Best Buy profits down 29% Best Buy Co.’s fiscal third-quarter profit fell 29 percent as the company kicked off the holiday season with significant discounting and sales weakness in most products besides mobile devices. The electronics chain is seeing profits pressured by competition from Amazon.com Inc. and discounters such as WalMart. Best Buy has ramped up its online and mobile offerings and plans to trim its big box store footprint by 10 percent over the next three to five years, but critics of the company argue it is moving too slowly to adapt to consumers’ gadgetbuying habits. Domestic gross margin fell by 1.3 percentage points, suggesting that while the company increased sales, it did so in large part by offering discounts. Mobile devices continued to be a bright spot. Computing and mobile phone sales at stores open at least 14 months — as well as revenue related to call centers and websites — rose 8.8 percent. But comparable-store sales of consumer electronics slumped 4.8 percent domestically while the entertainment category posted a 9 percent decline. For the quarter ended Nov. 26, Best Buy reported a profit of $154 million, or 42 cents a share, down from $217 million, or 54 cents, a year earlier. ■ Wal-Mart lobbying hard Wal-Mart Stores reported that it spent $1.49 million during the third quarter of 2011 on issues related to food, nutrition and taxes. Lobbying charges increased by $1.19 million from the third quarter of 2010. According to a filing with the House clerk’s office, WalMart lobbied the Congress, U.S. Department of Commerce, Environmental Protection Agency, U.S. Department of Agriculture, Department of Labor, and the Federal Trade Commission. The company has lobbied on trade bills related to Panama/ Colombia Free Trade Agreement, while providing more supply chain security. In addition, Wal-Mart remains concerned on the health-care reform issues, as the new regulations might hurt the company’s profitability. Wal-Mart also delivered better-than-expected third-quarter 2012 results of 97 cents per share in mid-November, surpassing the prior-year earnings of 90 cents a share. ■ Grocers turn to more labeling When Supervalu Inc. decided to put nutritional labels on its food, the grocery chain was determined not to play nanny to its customers, according to Chief marketing Officer Julie Dexter Berg. But by not calling out unhealthy food, Supervalu’s labeling program may be setting itself up to fail, Michael Jacobson, executive director at the Center for Science in the Public Interest, told Bloomberg.com. The labels won’t help win the war on obesity because they’re being drowned out by a marketing onslaught from the likes of Cheetos maker PepsiCo Inc. and Kraft Foods Inc., he said. “People have habits and preferences, they trust brands,”
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Jacobson said. With a record two-thirds of Americans overweight or obese, companies from Wal-Mart Stores Inc. to Supervalu are trying to avoid blame for the obesity epidemic, according to Jacobson. Two years ago, food companies including Kraft and Kellogg Co. pulled their own healthy labels following an investigation by the U.S. Food and Drug Administration. After being picked on for selling fatty, processed fare, many stores see healthy food labels as a must, said Brahm Ahmadi, chief executive officer of People’s Community Market, an independent grocer in Oakland, California. “To win goodwill among decision makers at all levels of government is probably seen as a good investment,” he said. ■ Hutchinson Tech denied rebate Hutchinson Technology wants a property tax rebate from the city of Sioux Falls because the manufacturer sold its plant here for less than it was assessed, but Minnehaha County commissioners weren’t impressed with that argument. The company’s lawyer, Sandra Hanson, presented two scenarios to the commission in which the firm would have either $55,006 or $78,238 property tax rebated because of an inaccurate tax calculation or a disputed real estate appraisal. Commissioners unanimously rejected the request. In denying Hutchinson, commissioners said the company did not follow the appropriate appeals process. Commissioners also defended the tax calculation and appraisal. Granting Hutchinson’s request could set precedent for others to challenge property tax assessments and destabilize the county’s entire tax-collection process, commissioners said. In 2008 and 2009, Hutchinson paid $338,245 in property tax on its building. In early 2009, Hutchinson eliminated hundreds of jobs and closed its Sioux Falls plant. When the company sold the building to Sanford Health in July 2009, the purchase price was $12 million, compared to its assessment of $18.5 million. ■ General Growth occupancy rises General Growth Properties, the second-largest U.S. mall owner, said that its funds from operations excluding some items may rise to as much as $1.03 a share next year as occupancies rise. General Growth, which left bankruptcy protection 13 months ago, is refinancing debt to cut expenses and plans to expand, redevelop and refurbish properties to boost growth. In October, the Chicago-based company sold Faneuil Hall Marketplace in Boston, the office and garage components of Westlake Center in Seattle and a shopping center in Provo, Utah, as it focuses on regional malls. Occupancy probably will rise to 92 percent in 2012 from 90.5 percent this year, according to General Growth. General Growth owns River Hills Mall in Mankato.
And the
Winners are‌
Minnesota Lawyer’s Attorneys of the Year 2011
Randall Knutson, Scott Kelly and Daniel Bellig
Congratulations Honorees for the Attorney of the Year award are chosen based on leadership in the profession, involvement in major cases. Knutson, Kelly and Bellig successfully challenged the Minnesota Department of Health to secure the genetic privacy rights of more than one million Minnesota children.
MANKATO, MN
507.625.2525 | FARRISHLAW.COM
To learn more, call us at 800-729-7575
Corporate Graphics Your Printing Solutions Company 1750 Northway Drive North Mankato, MN 56003 www.corpgraph.com
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Special Focus: Branding your integrity
Instilling customers’ trust takes more than just words By Marie Wood
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company that can be trusted will rise above competitors, gain loyal customers and attract new customers. In order to gain trust in a competitive marketplace, businesses must demonstrate brand integrity to their customers. “If you’re branding integrity, it’s about staying true to who you are,” said Scott Taylor, former president of Brett’s department store and a business instructor at South Central College. “The promise of consistent experience — that’s what they want to trust.” Many national corporations have branded their integrity. Taylor noted Sears and its lifetime guarantee of all hand tools. When your screwdriver breaks, a store employee gives you a new one, and chances are you’ll buy from Sears again. As a member of Minnesota Mentors, Taylor has worked with many local business owners who are succeeding in branding integrity. For instance, Mark Thomas Company in Sleepy Eye supplies stationery products and other materials to funeral directors. The company has earned their customers’ trust with superior service. Customer service representatives answer by the third ring. If the phone rings four times, then the owner answers. The expectations for employees are clear, reinforced and celebrated daily. “It takes a lot of work to make the experience smooth and wonderful,” said Taylor. MV
Branding integrity in an online world By Marie Wood
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ocial media like Facebook, Twitter and YouTube has made marketing more interactive than ever before. Drive by River Hills Mall and you’ll see the message on its sign “Like us on Facebook.” “Social media is all about how customers are experiencing certain brands,” said Brian Maciej, president of Lime Valley Advertising in Mankato. “In marketing messages we have to show the results of customer experience. We have to describe what the customer experience is like,” said Maciej. Many companies have Facebook pages, where customers can post positive and negative reviews. The
first instinct is to delete the negative review. However, if there are 20 favorable comments and one unfavorable comment, it may be wise to leave the unfavorable comment
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there, advised Maciej. “Their overall perception will be favorable, but it will also be believable,” said Maciej. “Believable translates into trust and enhancing integrity.” Social media can be a tool to measure and improve customer experience. If customers are posting complaints about hold times, the company can address the issue. Maciej recommends fixing the problem, testing it for a week, and posting results. “ ‘We have cut our hold times in half.’ Then it’s positive even if somebody has never seen the negative comments,” said Maciej. MV
Who are you online?
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oogle, Yahoo! and Bing your business. Do you like the search results? Does it offer accurate information and a positive perception to a potential cus-
tomer? Your listings on search directories, presence on social media and blogs, and your own Web site make up your online reputation, said Yvonne Cariveau, president of VoyageurWeb in Mankato. Most people use their phones, laptops and tablets to find restaurants, stores, entertainment and services, especially when traveling, explained Cariveau. “In our community, we want to find good information about businesses we want to patronize,” said Cariveau. While VoyageurWeb can manage your online reputa-
tion and improve your search results, Cariveau encourages business owners to take control. Here’s how. Claim your listings on search engines. For example, on Yahoo! Local, you’ll see a link that says “Own this business? Enhance your listing.” Make sure your Web site and listings include key words that people use in searches. This is one method of search engine optimization (SEO). Sign up for free online tools to monitor your reputation. socialmention.com sends daily e-mail alerts of your brand, company, or CEO based on a search of social media including Twitter, Facebook, YouTube and blogs. Sign up for Google Alerts to query your business and receive e-mail alerts of results. Check your Yahoo!, Google and Bing listings every six months. ••••
Get Digital Mankato Workshop
VoyageurWeb, Q Computers and OfficeMoxie are offering a hands-on workshop where you will enhance and protect your online reputation. Claim your listings, use key search words, engage your digital community. The half-day workshop is Jan. 14. Visit getdigitalmankato. com. MV
Ten tips to branding integrity • Brand the personality of your business. Look at what’s authentic about your business and make that your brand. • Be true to who you are. That means you must deliver the consistent customer experience that you have promised. • Be crystal clear in the understanding of your brand. Write it down. Be specific. Explore the nuances. If you say you are customer service oriented then make your customer service calls free of common aggravations. For instance, your customers should only have to say their account number once. • Test your understanding of your brand. Evaluate the customer experience by asking questions, using surveys and observing customers leaving your business. Are they smiling? Step back to work on your business, not in your business. • Actions speak louder than words. Customers are savvy at discerning a message that doesn’t ring true. What you do means more than what you say. • Everything you do must be consistent with your
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brand. Every impression and interaction counts: parking lots, greetings, delivery and work vans, storefronts, home pages, social media and advertising. Employee buy-in is the only way to execute brand integrity. Every employee has to understand the brand, believe it and sell it. Motivate employees to embrace your brand. Celebrate success and recognize your employees daily. Check in with employees regularly, reinforce company culture, begin meeting agendas with the most important issue. Quickly correct bad customer experiences. Go the extra mile to win back your customer. In 1982, Johnson & Johnson issued a $100 million national recall of all Tylenol products due to tampering. The result was tamper-proof packaging and a renewal of trust in the Tylenol brand. Branding Integrity starts at the top. The culture, attitude, atmosphere and behaviors of a company and its employees reflect the owner. MV MN Valley Business • JANUARY 2012 • 19
Business Commentary
Business partnerships critical to Mankato area schools
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ollaboration is one of the core values identified in the Mankato Area Public Schools’ Strategic Roadmap. That concept of collaboration takes on many forms, and the collaboration represented in our school-business partnerships is of vital importance to MAPS. Why? These partnerships provide opportunities for students, teachers and businesses to have a significant positive impact on students, enhancing students’ educational experiences, providing more knowledgeable future employees and consumers, and increasing understanding and positive working relationships between the business and education community. Last year, a task force of members from schools and area businesses worked to create a plan outlining goals for growth in expanding students’ experiences developing college and career readiness skills. This plan, entitled Class2Careers, is the next step in our journey of collaboration. Broad outcomes of the plan are to support life planning, increase synergy between and among stakeholders, prepare students for life after high school, help educators increase integration of 21st century skills, and equip graduates to be lifelong learners.
room. Partnership activities also affirm a student’s self-identity and cultural awareness by providing opportunities for interaction with the business community. Students also gain a realistic picture of the business world and become aware of the range and extent of business activities and opportunities.
By Sheri Allen
What are specific ways that these partnerships can benefit students? Skill development and experience One obvious way is to improve and reinforce students’ skill development and supplement classroom curriculum with relevant learning experiences in business and community. For example, our students taking the course, Certified Nursing Assistant, work in a healthcare setting for 21 hours each, getting the hands on experience necessary for understanding foundational concepts in the course and developing skills required to pass the CNA state certification exam. In addition, students in our Engineering Design and Development course start with a problem and then design a solution to that problem. They regularly obtain feedback from a group of local engineers who work with them to overcome challenges at different times throughout the design process. During regularly scheduled meetings, these professionals urge students to maintain their focus on questions that will lead to a workable solution and share knowledge and suggestions they’ve obtained while working on similar projects. When students spend time out in the community and with business partners, they are given access to a world that would otherwise remain foreign and unfamiliar to them. The opportunity to show students what a career entails, as opposed to using only words to develop understanding, is key to providing rich and powerful learning experiences that will spill over into the classroom. Interaction with adult role models Having access to professionals in a work environment is critical for our students. Adult role models from the business sector provide insight not otherwise available in the classroom, demonstrate to students how basic skills are used in the work place, and connect the relevancy of academics and responsibilities of work outside the class-
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Career exploration Another reason our business and community partners are vital to us is the support they provide in the area of career exploration. The world is full of possibilities for our students, which can be exciting, but also overwhelming. In April of 2011, over 180 volunteers helped host 1,047 regional sophomore students at the annual Career Expo. Additionally, over 20 businesses annually host eighth graders during a career day event. Activities like these are critical as we help guide students into vibrant and industrious career paths.
Mutual Benefits These partnerships benefit students by businesses and schools sharing their expertise and services with one another. This often results in increased resources and services that not only enhances the education of students, but also provides assistance to teachers and administrators. The MAPS Business Advisory Committees are a means for this to happen. These advisory committees advise teachers in the areas of curriculum and instruction, equipment and facilities, and student recruitment and career guidance. They provide professional development for teachers and, where appropriate, help with marketing and advocacy. When our teachers work with members of our business community, they are given the opportunity to develop a greater understanding and appreciation of the issues they are confronting. It strengthens their skill set and expands their knowledge and understanding of the skills our students need to be successful when they leave our system. As a result of these partnerships, businesses benefit by engaging with the community and giving back through their interactions with students and staff. It provides an opportunity to identify upcoming talent, and to create an awareness of the company and the opportunities and benefits it provides potential employees. Finally, it provides a vehicle for business to have insight and input into what and how students are learning. The collaboration between educators, business and community leaders have evolved, and continues to evolve, to full working agreements by which school personnel and business and community organizations have learned new ways of working together, developing a vision and sharing responsibility for student growth and development. We are fortunate our students benefit from our partnerships with all of you, and we are continuously cultivating future partnership opportunities to build a stronger career community. MV Sheri Allen is superintendent of Mankato Area Public Schools.
2011 closes strong for local
Cover Story
ECONOMY
Weakness in housing sector, growth in retail sales and job numbers By Tim Krohn • Photos By Pat Christman 22 • JANUARY 2012 • MN Valley Business
The year just past was a good one by virtually every business measure.
Cover Story
From job numbers to retail sales and commercial development, the Mankato area finished considerably stronger in 2011 than the year before.
While problems in the housing sector continue and unemployment remains relatively high, local leaders say they expect this year to continue on a trend of steady progress. “I’m cautiously optimistic,” said Mankato City Manager Pat Hentges about the year ahead. “In all reality the new normal will be what we’ve seen in economic development in the past couple years. There is a sufficient amount of economic development, Paul Wilke, general manager of River Hills Mall (left), with but not enough to return us to what Daryn Stoltenberg, operations manager with General Growth Properties. we saw early in the ’90s.” Stoltenberg oversaw construction of the new Ulta store In North Mankato, City Adwhich opened late last year. ministrator Wendell Sande said the housing construction sector remains sluggish, but the city saw the start of “Mall sales have increased this year in virtually every catseveral commercial projects last year. egory,” said Paul Wilke, manager of River Hills Mall. “2011 has proved to be our best economic development The mall’s experience echoes results of a new retail study year ever. We far exceeded our expectations,” Sande said. showing Mankato’s sales are growing at a faster rate than anywhere else in outstate Minnesota. Retailers smiling The University of Minnesota study shows that in 2009, for With the state and national economy driven heavily by conthe first time, Mankato became a so-called Level 1 retail center sumer spending, the news from local retailers bodes well for (there are seven levels). Mankato had retail sales of about $900 south-central Minnesota. million, and Mankato’s sales have grown faster than the other
MN Valley Business • JANUARY 2012 • 23
And a new restaurant, also so far unnamed, will build on the space between Olive Garden and the Sears Auto building. A new store, Earthbound Trading Co., also is opening in the mall this year. River Hills sold a parcel near Scheels for a Courtyard by Marriott that started construction in late fall. “Having a hotel tied to the mall is going to be good for us. They will have a convention center there, which makes it better.” Wilke said many of the malls owned by parent company General Growth have adjacent hotels. Wilke said that after putting the brakes on new stores, retailers are picking up the pace. “I go to our trade association conventions and people talk about a lot of activity. In 2008, 2009 activity was slow and (retailers) were being very picky about where they located. We’re not hearing that anymore, they’re out there doing expansions.”
Jobs numbers stronger
Cover Story
River Hills Mall General Manager Paul Wilke said it was a strong season for retailers. regional cities of Duluth, Rochester and St. Cloud. Among River Hill tenants, teen apparel sales were up more than 20 percent last year, the strongest of any category. “The family apparel — the teen clothiers like American Eagle, Hollister, Buckle — they’ve done very well,” Wilke said. Victoria’s Secret has been one of the top performers in the mall, while book sales, shoes, children’s, home furnishings, personal care and jewelry all saw sales increases overall at River Hills. “I can’t think of a single category that’s really struggled. That’s impressive.” Wilke doesn’t get sales figures from all of the anchor stores attached to the mall, “But the ones we do get results from are all up.” Another good sign, said Wilke, is an uptick in leasing of spaces in and around the mall. “We’re seeing a lot of leasing activity and we have a number of deals in place to start (in 2012),” he said. The mall’s vacancy is at only about 3 percent. The biggest new tenant was Ulta, a large cosmetics, personal care and hair salon chain that moved in near the food court. The mall also has a yet-unnamed retail tenant moving into the former Pier One building near the entrance to the mall. They will open in March. Sales of existing homes in the region were up less than 3 percent in 2011 compared to 2010.
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The end of 2011 saw a surprising surge in employment. The number of people holding jobs in Blue Earth and Nicollet counties hit an all-time high of about 57,000 people. Meanwhile, the unemployment rate fell to just above 4 percent, the best number in three years and just about 1 percent above pre-recession rates. The job numbers have to be taken with a bit of caution. The state occasionally tweaks how they calculate unemployment and job numbers. And the unemployment rate doesn’t include people who are out of work but have given up actively looking for a job. The number of people who gave up looking for work generally rose late in the year in Minnesota and nationally, thereby lowering the unemployment rate.
Housing still slow
New home construction continues to be a relatively weak spot in the local economy and Hentges doesn’t see any dramatic turnaround, particularly in single-family home building. “I think we’ll see about 100 single-family homes a year,” he said. That would be about one-third of the annual hous-
Commercial a pleasant surprise
Paul Vogel, Mankato community development director, said last year was a pleasant surprise. “We anticipated $35 million to $40 million of construction. (Through November) we’re up to $69 million, which is outstanding.”
Cover Story
ing starts seen in the early 2000s. Sande said the story is the same on his side of the river. “Residential continues to be a bit slow. We had 27 total permits, 15 single-family through November and we had 15 single-family in 2010, too. That’s been a low point for us.” In the early 2000s, the city saw a high-point of 50-60 single-family homes being built each year. “It’s tapered down. This is very reminiscent of 1982, 1983.” Still, both men say that considering how hard many areas have been hit by housing problems, they’re gratified to see even modest gains in home construction. “Right now, I think both our cities are pretty happy with our single-family starts,” Hentges said. Hentges expects there may be an increase in new multiunit apartment housing in the coming years. For one thing, Minnesota State University is planning to close Gage residence hall, replacing it with smaller halls. “There will be 500 students who will need housing and won’t have it on campus,” Hentges said. Housing studies have shown there will be an ongoing demand for more multi-unit housing, even though vacancy rates have crept a bit higher in recent years. “We were used to very low vacancies, maybe 1 percent,” Hentges said. “I think we’re maybe in the 5 percent range now.” He suspects much of that increase was due to many downtown single-family homes being converted to multi-units. “I think there are more vacancies there.” Sande said he, too, expect better activity in apartment construction in the next few years. “The demand has been very high.”
Mankato City Manager Pat Hentges outside the former HECO building which is being renovated and will be the US Bank Building. New commercial-industrial construction topped $13 million, nearly three times that of 2010. The new Bremer Bank building, a Volk Transfer office and warehouse building and the start of a Courtyard by Marriott at River Hills were a big part of that construction tab. Hentges said that while the numbers were good for commercial projects in 2011, he doesn’t expect boom times in the year ahead. “I just don’t see a lot of major commercial development coming down the line. “Some of the existing glut of available industrial space is probably stifling any speculative commercial development. The Shari Candies building is empty and there are others.” Keith Robinson, a longtime commercial real estate appraiser, said property values have stayed relatively stable for com-
MN Valley Business • JANUARY 2012 • 25
Cover Story
Wendell Sande, North Mankato city administrator, outside the LJP building, one of several projects completed in the city’s industrial park last year.
mercial buildings, but are off for bare development land. “We didn’t have a big buildup of commercial properties prior to (the recession), so values weren’t inflated. So we didn’t have a lot of correction that needed to happen. Values have stayed relatively stable,” said the owner of Robinson Appraisal. But investors holding bare development land have taken a hit. “There’s a lot of that land on the edges of cities. The values are still relatively stable, but those values did take a hit.” As in recent years, local leaders are waiting and hoping to hear from Wal-Mart that it is going to begin construction on a major distribution center. The retailer owns land for the project on the northeast edge of Mankato and has told city officials that while its plans were slowed by the recession, they still intend to build the facility, which would bring 500 or more jobs and spur other development. “The big thing is when the Wal-Mart distribution center comes,” Hentges said. “I’m cautiously optimistic this year could be the year. That will certainly help our development.” He noted Wal-Mart has started an aggressive plan to open new stores in the Twin Cities, stores that the company planned to supply from the new distribution center. “Hopefully they can move along quick enough with those store starts to make Mankato happen.” Sande said North Mankato’s unexpectedly strong year in commercial development was focused mostly in the city’s in-
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dustrial park. “We had six projects that were either new buildings or expansions. The projects included new buildings for Peterbilt, Ziegler, LJP and expansions at Lindsay Window and Door, and Kato Engineering. The city had $17 million in industrial-commercial building permits, most for new construction or expansion and a smaller portion for renovations. Sande said $7 million to $10 million per year has been typical in the past. “We’re looking at a good year in 2012. Our initial contacts have been positive,” Sande said. “Mostly in the industrial park, but we’re also looking at projects in the central business district.” The former Dollar Store on Belgrade Avenue is slated for a complete rehabilitation and the former Budget Mart convenience store on Belgrade has reportedly been sold and is to be reopened, Sande said. Mankato also has seen a continued renaissance of its city center. The former HECO building has been renovated and will be named the US Bank building. The Northwestern Office building is getting a makeover as Mayo moves its administrative and business divisions to the Second Street location. There have also been more than a dozen smaller commercial rehabilitation projects in the city center last year. MV
Advancing Business for a Stronger Community
Public Policy Impacts Business
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ome business people are naturally passionate about politics. Others less so. But if you’re in business, there’s an important reason to get involved in public policy– it impacts you. Policy shifts can affect everything from the way you do business to your bottom line. They can also impact the vibrancy of the community in which you operate. Given the many issues impacting business, even the most zealous political pundit might have trouble keeping up with it all. Often, business organizations strive to provide a connection between the business community and public policy makers. They typically do this in one of two ways: 1) Lobbying - which involves taking a clear direction or stance on a certain issue and attempting to persuade policy makers in this direction. 2) Advocacy - gathering information and data on a particular issue and then sharing the results with decision makers, so they are informed about how the issue is perceived by various stakeholders. Lobbying is appropriate when an organization believes all or a vast majority of the individuals it is representing have a similar viewpoint on an issue. For years, chambers of commerce and other business organizations have said, “the businesses of our town believe, support, endorse…(fill in the blank).” But when it comes to a group as diverse as the Greater Mankato business community, depending on the issue, opinions and ideas can vary widely. That’s why Greater Mankato Growth’s board and public affairs steering committee are committed to providing information from a variety of perspectives on many public policy issues, as well as opportunities for interaction with those making that policy. In other words, GMG Advocates. Through tools like surveys, forums and dialogues, instead of say-
ing to policy makers, “The Greater Mankato business community thinks this,” GMG is able to say, “We asked our members and 82% said they agree, while 18% oppose and here’s why they said they feel that way, and we would welcome the opportunity for you and our business community to get together for a meaningful dialogue on this issue.” According to GMG President & CEO Jonathan Zierdt, “It would be presumptive for GMG or any organization to say ‘we are the voice of business in Greater Mankato and here’s what we/ they think.’ It’s the members of the business community themselves who are really the voice of business, and we provide an opportunity for them to speak for themselves and make their own informed decisions.” “This does not mean GMG is passive in this process. The mistake some people make is that because they don’t see us taking strong stands on issues, they think we are passive. However, just because we’re not divisive, doesn’t mean we’re not active. What could be more active than going to the extra effort of getting the entire cross-section of ideas and input from the business community and sharing these perspectives with public policy leaders?” While it takes more time and effort, public policy makers and business leaders have told GMG they appreciate this constructive, comprehensive approach. Key to the success of this method is the involvement of those in the business community, so the variety of voices can be heard on issues at the local, state and sometimes even national level. Watch for news from Greater Mankato Growth or periodically visit greatermankato.com/gmg-publicaffairs.php for up-to-date information on a variety of issues that may impact your business today or in the future.
Greater Mankato Growth
2012 Greater Mankato Day at the Capitol
2011 Greater Mankato Day at the Capitol
On February 15, representatives from businesses from throughout the region will have an opportunity to meet with legislators from across the state at the third annual Greater Mankato Day at the Capitol. By participating in this important event, you can let decision makers in St. Paul know about the Greater Mankato business community and its impact on the State of Minnesota and its economy. The day starts with a gathering in the Rotunda at the Capitol, followed by meetings with legislators and concludes with a reception from 5:30 – 7:00 pm. For more information on how your business and you can get involved, visit greatermankato.com/gmg-dayatthecapitol.php.
Chamber of Commerce and Economic Development
507.385.6640 • greatermankato.com
growth in Greater Mankato
GROUNDBREAKING - BEC Community Fair Blue Earth County Weagel Park
RENOVATION - Centennial Student Union Ballroom Minnesota State University, Mankato
NEW BUSINESS - Dasch Salon 114 South Agency Street, Eagle Lake
NEW LOCATION - JBeal Real Estate Group 3 Civic Center Plaza, Suite 210, Mankato
NEW LOCATION - Nicollet Bike Shop 607 North Riverfront Drive, Mankato
NEW LOCATION - Pediatric Therapy Services 150 St. Andrews Court, Suite 310, Mankato
NEW LOCATION - Regional Center for Entrepreneurial Facilitation • 934 Marsh Street, Mankato
Does your business have an upcoming milestone moment? The Greater Mankato Ambassadors are here to help you celebrate! NEW BUILDING - Volk Transfer, Inc. 2205 7th Avenue, Mankato
Call 507.385.6640 MN Valley Business • JANUARY 2012 • 29
Greater Mankato Growth
NEW LOCATION - Spherion Staffing & Recruiting 709 South Front Street, Suite 2, Mankato
Member Activities 2012 Greater Mankato Growth Member Connecting Events Schedule Each year Greater Mankato Growth puts on a variety of events for the business community. Members who are investing in and are committed to the work of GMG in Advancing Business for a Stronger Community also have the opportunity to attend member connecting events throughout the year. GMG representatives from businesses at the engaged membership level or higher can engage with other GMG members at the monthly
Business After Hours 5:00 – 7:00 pm January 3 February 7 March 6 April 3 May 1 June 5 July 10 August 7 September 4 October 2 November 6 December 4
Loyola Catholic School Bolton & Menk Gustavus Adolphus College Mankato Clinic @ Madison East Center JBeal Real Estate Group North Star Aviation Mankato MoonDogs Chankaska Creek Ranch & Winery Charter Business LarsonAllen Mankato Brewery U.S. Bank - City Center
2012 Business After Hours Sponsored by
Business After Hours, Business Before Hours and other member connecting events. If one of these members wants to introduce a non-member to the benefits of Greater Mankato Growth membership, they may bring them to a Business Before Hours or Business After Hours event as their guest. For more information, contact Karen Toft at 507.385.6643.
Business Before Hours 7:30 – 9:00 am January 18 February 15 March 21 April 18 May 16 June 20 July 18 August 15 September 19 October 17 November 14 December 19
Holiday Inn Express & Suites Minnesota Valley Granite MRCI WorkSource Pediatric Therapy Services, Inc. and EllieGail’s Bakery & Catering Mayo Clinic Health System United Prairie Bank - Hilltop Abdo, Eick & Meyers, LLP Country Inn & Suites Hotel & Conference Center by Carlson HickoryTech Paulsen Architects, Inc. Pathstone Living Rasmussen College
Greater Mankato Growth
2012 Business Before Hours Sponsored by
November Business After Hours at MTU Onsite Energy
30 • JANUARY 2012 • MN Valley Business
November Business Before Hours at Brunton Architects
Cavalier Calls on the newest Greater Mankato Growth Members
Reichel Insulation 54040 Loren Drive, Mankato reichelinsulation.com
Shane’s The Auto Doctor 1219 North Riverfront Drive, Mankato
Weggy’s on Campus 1600 Warren Street, Suite 13, Mankato
AVID Nutrition 1600 Warren Street, Suite 5, Mankato AVIDclub.com
Billings and Company 11 Civic Center Plaza, Suite 008, Mankato
LawnCrafters, LLC 200 Palancar Avenue, Mankato katolawncare.com
Skogen Mechanical skogenmechanical.com
MN Valley Business • JANUARY 2012 • 31
Greater Mankato Growth
Do It Yourself Auto 331 Webster Avenue, North Mankato MankatoCarRepair.com
Advice from the Accelerator: New Online Tax Tool By Jill Klinger, GMG New and Emerging Enterprise Director
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ince its inception in 2006, the Greater Mankato Business Accelerator has met with hundreds of new and early stage business clients. During that time never once has a client displayed enthusiasm over doing their business taxes. In fact, many clients have admitted they found the tax process challenging. With limited resources, having an accountant on staff isn’t always realistic for early stage businesses. Thankfully, the sentiments of business owners were heard by the Minnesota Department of Revenue, and they took action. Recognizing that the Minnesota tax system could be more fluent and user-friendly, the Department of Revenue developed and launched “e-Services” in October 2011. e-Services is an online
application created to make it easier for businesses to file and pay taxes virtually. Entrepreneurs typically juggle multiple business tasks beyond their product or service, such as marketing, finance and human resources. Wearing all of these different hats makes fitting all business-related activities within typical business hours unrealistic for many new business owners. eServices offers businesses the ability to view taxpayer records, file returns, make payments and update registration information online at their convenience. The flexible 24-7 online access offered by eServices lets entrepreneurs have more control in their hectic schedules. The Minnesota Department of Revenue recognizes the sensitive nature of the
information provided by each business; therefore, enhanced security has been implemented to keep information safe. Realizing not every business owner is an accountant, the Minnesota Department of Revenue now offers real time tax help to get you on the right track. There’s nothing worse than getting part way through tax forms and having to start over because of an unanswered question. The e-Service tax tool is a step in the right direction toward helping new and emerging businesses in Minnesota. Find more information by visiting greatermankato.com/business-financingtaxincent.php.
The Business Accelerator is a program of Greater Mankato Growth, City of Mankato and Regional Economic Development Alliance. The program serves as a single access point to connect entrepreneurs with the area resources and services they need to succeed.
Trends point to urban and downtown centers Greater Mankato Growth
By Eric Harriman, CCP Coordinator
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s I review commentary or research about how U.S. cities will grow in the future, a common thread emerges. This thread was recently echoed in an nrdc.org blog, which estimates that “only 12 percent of future homebuyers want the drivable suburban-fringe houses.” The predictions were based on a “durable and lasting” shift in demographics. As a result, they say, “communities that [will] prosper most as the 21st cen-
tury matures will be the ones that recognize these shifts and welcome them with the right kind of planning, development and amenities.” Elsewhere, notable urban theorist and Professor Richard Florida’s research suggests that density of creative workers is a key component in entrepreneurial innovation. And this “creative class,” as they’re called, seeks urban or downtown cores for the variety of social and business interactions that spontaneously oc-
cur, whether in coffee shops, on sidewalks or in other unexpected locations. Whether such predictions are entirely or only partly true, the City Center Partnership stands ready to capitalize on the seemingly strong tendencies toward downtowns. As a determined organization the CCP is tasked with ensuring City Center Mankato is the epicenter of a prosperous community well into the future.
The City Center Partnership is an affiliate of Greater Mankato Growth that was established in 2008 as a private-public partnership to find opportunities and solutions to keep the City Center vibrant and prosperous.
32 • JANUARY 2012 • MN Valley Business
CVB sees major economic impact in events, tournaments and conventions By Christine Nessler, Marketing and Leisure Sales Director
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he Greater Mankato Convention and Visitors Bureau is here to help the community. We lead the development of the visitor economy in Greater Mankato and actively promote Greater Mankato as a premier destination for conventions, tournaments and tourism. These activities bring a steady flow of visitors and business activity to Greater Mankato - which results in a flood of spending that benefits local residents and future visitors. Our promotion of Greater Mankato also strengthens the hospitality industry, which provides jobs, a diverse tax base and amenities for everyone to enjoy. Here are a few examples of great events, tournaments and conventions that stimulated our local economy in 2011.
TOURNAMENTS Minnesota State University, Mankato hosted the 2011 NCAA Division II Central Regional Men’s Basketball Tournament in March 2011. Eight teams from around the country participated in the tournament. According to Mike Powicki, Assistant Director for Athletics for
Minnesota State University, the threeday tournament had an attendance of 7,718 people. On June 2-5, 2011, Greater Mankato played host to the Minnesota Senior Games. The tournament brought in 255 athletes and additional guests. According to Josh Anderson, Event Sales Director for the CVB, 90 percent of participants came from outside Greater Mankato and represented six states. The tournament had roughly $200,000 worth of economic impact for Greater Mankato. Next year’s Senior Games will be May 31 –June 3, 2012. CONFERENCES In addition to events and tournaments, conferences in Greater Mankato also have an economic impact. The CVB was involved in 22 conferences in 2011. Of those 22 - The Lions Club Convention, the MTU Onsite Energy Sales Seminar and the Feminists & Rhetorics Conference had a combined attendance of nearly 1,200 people and economic impact of approximately $515,000, according to Larissa Mrozek, Senior Sales Director of the CVB. You can do your part to help contribute to the economic growth of Greater Mankato by bringing events, tournaments and conferences home. If you have an idea for an event, tournament or convention you would like to bring to Greater Mankato, contact the Greater Mankato Convention and Visitors Bureau at 507.385.6660 or visitors@greatermankato.com.
The Greater Mankato Convention & Visitors Bureau (CVB) is an affiliate of Greater Mankato Growth (GMG), operated as an LLC under GMG.The CVB is dedicated to the important work of attracting and servicing visitors to Greater Mankato.
MN Valley Business • JANUARY 2012 • 33
Greater Mankato Growth
EVENTS The CityArt Walking Sculpture Tour began in May 2011. This exciting exhibit of 25 outdoor sculptures is displayed year-round in the City Centers of Mankato and North Mankato. The CityArt Walking Sculpture Tour has significantly increased pedestrian traffic in the City Center. According to Tami Paulsen, City Center Partnership Aesthetics and Livability Chair, the tour has brought in at least 10,000 participants from over 21 states, 72 cities and five foreign countries. Arts by the River was a very successful first-time event, according to Eric Jones, Marketing Manager of the Verizon Wireless Center. The two-day event, held in June 2011, featured 40 artists from
around the region at Riverfront Park in Mankato and brought in more than 4,000 people. Next year’s event is scheduled for June 9 - 10, 2012. The 46th annual Verizon Wireless Vikings Training Camp took place at Minnesota State University, Mankato in August. The camp brought in nearly 45,000 visitors, despite a shortened camp due to the extended NFL lock-out. The camp brings in millions of dollars to Greater Mankato in just a few weeks per summer. The Mahkato Traditional Wacipi is an intertribal pow-wow held every September at Land of Memories Park in Mankato. Participants come from as far as Canada and Alaska, with at least 75 percent of the states represented according the Mahkato Wacipi Vice President. On average, the event brings in close to 12,000 per weekend. Next year’s event is September 21- 23, 2012. The 2011 Mankato Marathon was a two-day racing event with five different races from which to choose. The October event brought in nearly 3,800 runners and numerous spectators as well. Runners came from 33 states and Canada. Next year’s event will be the weekend of October 20-21, 2012.
Budget surplus: How did that happen? Regional Outlook
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he email that arrived on Dec. 2 was unmistakable by its subject line, “How’d that happen?” Without even opening the e-mail sent by a friend in St. Peter, I knew that he was referring to the $876 million projected surplus announced the day before. It was certainly a fair question, as anyone other than Tom Stinson (the state economist) who tells you that they saw it coming is likely pulling your leg. In fact, just the day before most of the state’s major news sources were informing their readers and listeners to prepare for a projected deficit of at least $500 million. So I will have to admit that I too was surprised by the news. Immediately politicians and political pundits filled the media with their own unique interpretations of this good news. Some suggested that the surplus, along with the state’s current 6.4 percent unemployment rate indicated that Minnesota is well on the road to economic recovery. Others used the good news to suggest that it affirms the policies and budget restraints that were put into place during the last legislative session are working. Of course, when such good news occurs everyone wants a piece of the credit and everyone is free to read only those parts of the forecast that are congruent with their perspective. But in fact, the November forecast has two separate components and each tells a unique story. These components are 1) the budget forecast for the remainder of the current biennium; and 2) the economic outlook and budget forecast for the next biennium. There’s little doubt that the news regarding the remainder of the biennium is good; after all, how can an $876 million surplus be viewed any other way? But as my friend in St. Peter asked, “How’d that happen?” Well the reality is that the surplus was generated more through reductions in state expenditures than increases in state revenues. In fact, the groundwork for the projected surplus was actually laid in 2010. For you see, now that the state’s books have been officially closed for 2010 we learned that state revenues actually came in $358 million above previous projections, with most of it tied to increased income taxes. That, along with state expenditures coming in $205 million lower than anticipated and a small balance carried forward from the year before, allowed the state to close its books with an ending balance of $526 million. As I noted above, this laid the groundwork for the current biennium’s surplus. When the November forecast was released we actually learned that revenues for the reminder of the biennium are actually expected to come in $24 million less than previously projected. But again, expendi-
“While wages fell greater in Minnesota during the recession than they did nationally, it now appears that our wages are rebounding stronger.” ■
By Jack M. Geller, Ph.D tures are expected to be $348 million less than earlier projected; more than making up for the slight drop in revenue. Tie that to the balance carried forward from the previous year and Minnesota ends the biennium with an $876 million surplus! Now if you are wondering why the state is spending less than projected, the answer can be found mostly in our Health and Human Services spending. In fact the overwhelming majority of the savings comes from reduced expenditures in our state’s Medical Assistance program. Some of this can be credited to higher than expected federal matching funds and some is from simple savings in the program. But the major take-away here is that while the news is certainly good, any suggestion that the surplus is indicative of the state’s economy taking a sharp turn upwards is unfortunately both premature and wrong-headed. Looking ahead to the next biennium which begins July 1, 2012, the news doesn’t really get much better. In fact since the last forecast in February, the projections for economic growth have been lowered. Back in February GDP growth for the next biennium was projected at 3.2 percent and 2.9 percent respectively. Unfortunately, with this latest forecast those figures have been revised downward to 1.8 percent and 1.6 percent; and the probability of another recession which was previously set at 20 percent is now at 40 percent. The consequence of all this is that economists now expect Minnesota to begin the next biennium with a $1.3 billion deficit. Is there any bright spot in all this? Well in some ways the answer is yes. First, let’s not lose sight of the fact that an $876 million
34 • JANUARY 2012 • MN Valley Business
surplus is always good news. Second, with Minnesota’s unemployment rate more than 2 percentage points below the national average, we are certainly in a better position to economically recover at a faster rate than many other states. And lastly, while wages fell greater in Minnesota during the recession than they did nationally, it now appears that our wages are rebounding stronger as well. In fact, since the plunge in 2008 Minnesota wages have actually increased by 2.9 percent, while wage growth nationally has been 1.7 percent. Back in June 2009 my column discussed the likelihood of a very slow and steady economic recovery, which former Vice President of the Minneapolis Federal Reserve Bank Art Rolnick nicknamed “a bathtub recovery.” Clearly by any measure, that projection turned out to be accurate. Now as we enter 2012 it appears that Minnesota has indeed been slowly climbing its way out of the bathtub. And I suspect that if our political leaders can simply avoid any major changes to the budget or wrong-headed jolts to the economy, we just may find ourselves back to, or possibly above pre-recession levels by 2014. MV
Geller is professor & head of the Arts, Humanities & Social Sciences at the University of Minnesota Crookston. He also serves as director of the federally funded EDA University Center at UMC. He can be reached at gelle045@umn.edu
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Up and Coming
Julie Marie Guse opened Julie Marie’s on the Mankato hilltop late last year.
Julie Marie’s aims for the unique Former Little Red Shed owner moves to hilltop By Jean Lundquist Photos By Pat Christman
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or nine years, Julie Marie Guse owned and operated The Little Red Shed in Old Town, Mankato. She closed The Little Red Shed in March. In May she held a clearance sale, and everything that was left, except a few shelving units, went to the Vine
36 • JANUARY 2012 • MN Valley Business
Thrift Store. “They were delighted,” she says. After that, Guse focused her attention on her new store, Julie Marie’s. In early November, Guse opened her Julie Marie’s store in the old Hostess building,
■ “The
store offers decorations, vases, lamps, mirrors, clocks, oil paintings and prints in all sizes, upholstered furniture, plus hard wood furniture including kitchen tables and chairs, hutches and entertainment centers.”
— Julie Marie Guse
If someone doesn’t find what they are looking for, Guse will work with them to identify special orders on any item. She has catalogs with many designs, plus upholstery samples from which a customer can choose. Much of the furniture in her store is furniture is from
Julie Marie’s offers items ranging from $2.95 to $5,000.
MN Valley Business • JANUARY 2012 • 37
Up and Coming
across from Shopko on Sioux Road. Anyone expecting to find remnants of or memories from The Little Red Shed in the new Julie Marie’s will be disappointed. “The Little Red Shed was mostly country. This is more upper scale, more traditional classic and contemporary,” Guse says of the difference. “Definitely higher end home decor.” “I wanted a change. A new name, new style, new everything,” she says. As much as anything, she wanted a hilltop location for her store. She says, “Old Town used to be viable, but now, not so much. There’s not a lot down there anymore. I wanted to be up on top of the hill where the action is.” The atmosphere in the hilltop area is totally different, says Guse. “It’s busier, and we have a lot of traffic.” In addition, the sales merchandise offers a different atmosphere from the Little Red Shed country decor. Julie Marie’s sales floor features items ranging in price “from $2.95 to a $5,000 sofa, and everything in between,” says Guse. “The store offers decorations, vases, lamps, mirrors, clocks, oil paintings and prints in all sizes, upholstered furniture, plus hard wood furniture including kitchen tables and chairs, hutches and entertainment centers.”
Up and Coming
Guse aims for an assortment of upper scale home decor.
Norwalk brand, made in Norwalk, Ohio. She offers many designs from Candice Olson, and all are made in the United States. Guse has also started to offer in-home consultations for clients. She started doing that, she says, when she owned The Little Red Shed. “Many people are looking for ways to display their items, or find things that will go with their interior. Others want a fresh new look.” By visiting in their home, Guse says she can help people find exactly what they are looking for. Guse does not hire contractors to complete the work a client wants done, such as painters, but will help them to pick out colors for walls, new furniture and upholstery fabric styles and shades, and the design for a room. “We can do just about everything.” A client Guse worked with as a consultant to re-do her home when she owned The Little Red Shed became a
38 • JANUARY 2012 • MN Valley Business
very good friend, she says. Now, that woman is a part time employee at Julie Marie’s. Although Guse is the primary in home consultant, her sister, another of her three part time employees at Julie Marie’s, will be working with her on these consultations. As the Julie Marie’s location is new, Guse says many people say they’ve heard of her store, but aren’t sure where to find her. She hopes with time that will change. She is delighted, she says, when people tell her that Julie Marie’s is unique in this area. “There’s no other store like it in Mankato. A lot of people say that when they stop in here.” Guse says she doesn’t know how Julie Marie’s will evolve over time, but being unique in what is offered, she says, means the future is wide open. The store is open seven days each week: Monday through Friday from 10 a.m. to 7 p.m. Saturday, 10 a.m. to 5 p.m., and Sunday, noon to 5 p.m. MV
(507) 625-4171 | www.bolton-menk.com
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All in the Family
Kelli and Bruce Milbrandt, with their kids Bryce, Kelsie, Kylie, Kayla.
A business with all the toppings Family opens Frozen Yogurt Creations By Sara Gilbert Frederick Photos By Pat Christman
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elli Milbrandt wasn’t surprised when her husband Bruce came home from a foodservice trade show last spring with an idea. He had pitched countless ideas and inventions before — and most of the time she just shook her head and told him no. So Bruce was pleasantly surprised by her reaction when he suggested opening a frozen yogurt shop with Honey Hill Farms. The concept, he explained, included several selections of selfserve yogurt as well as more than 50 different toppings that customers could help themselves
40 • JANUARY 2012 • MN Valley Business
to. It was gaining popularity elsewhere, he told her, and he knew that it would be coming to the Midwest soon as well. “I was on board right away,” Kelli says. “This is the only one of my ideas that she has ever jumped on,” Bruce adds. But this idea, Kelli says, made sense. Instead of taking their four kids out to dinner, they had often chosen to treat them to ice cream occasionally instead. “With six of us, going out to eat can be expensive,” she says. “So we go out for ice cream instead. It seemed like this idea would fit
MN VALLEY BUSINESS: Why did you think this frozenyogurt concept would work in Mankato? Bruce Milbrandt: We researched the demographic and saw that between the colleges and high schools, there were close to 20,000 students in this area. Also, there are a lot of moms with young kids here. Those are the people who like what we have here. Kelli Milbrandt: We also thought the price point would help. With the economy the way it is, it’s hard to buy a whole meal — but you can buy a small treat. Because you pay by the ounce here, you have more control over what you spend, and we like that.
BM: I’ll keep my job as a district manager for Farner-Bocken Company right now, because we need it for the health insurance and because it is still definitely the bread winner for our family. KM: I was working at Applebees until about a month ago. A lot of my customers from there have been coming in here to try this out. That’s been great.
MVB: What has your clientele been like so far? KM: There’s been a really wide range of people so far. We see a lot of students but a lot of adults too. And it’s crazy how people who know of this concept say that they’ve been waiting for this to come here. BM: That’s true; just last night I was here and someone came in and said they were so glad to see this in Mankato. MVB: Has it been busy? BM: It’s been steady — and we haven’t done any advertising yet. KM: We have had the same people come in every day since we opened — and some come in twice a day. They love the concept, they love that they have choices and they love all of the toppings. MVB: The process of opening this business is still fresh for you two. What was the most challenging part of the process? BM: Probably the business plan. We had to write that and neither of us really had any experience in that. We had some help from the Regional Center for Entrepreneurial Facilitation; they were a great help to us. … And I think that patience was the toughest part. We wanted to get going on this, and it was hard to wait. The state government shutdown cost about three weeks, because we had to wait to get approval for the floor plan and everything. We thought we’d be able to open in August, but that didn’t work out. MVB: Was it easy to work together to get this going? KM: It actually went very well. We work well together. There was only one day in the whole process that he said something and then I said something and we both just snapped. But that was about the only time. MVB: Bruce, you’re still working your full-time job as well but Kelli, you’ve already quit yours, right?
Allison Sowers, 11, dispenses her yogurt and chooses from more than 50 toppings at the Frozen Yogurt Creations shop. MVB: How have you been handling the day-to-day, runningthe-business details? KM: I do most of the day-to-day stuff. Bruce is usually here in the evening. BM: I’m doing most of the ordering, but I think she might be firing me because I didn’t order something that I should have. KM: People were asking for (that flavor). But it’s good now. MVB: All four of your kids are working here? BM: Yes. They’re all on the schedule. … Our oldest helps us close up at night, and the others help with shifts. We have about 12 total employees right now. KM: There isn’t really a lot of work that has to get done; they ring customers up, cut up the fresh fruit for the toppings and clean the machines. MVB: Are all six of you often all here together? KM: Before we opened, we were. But we haven’t been since. BM: But we will be on Christmas Eve. We’ll all be here until we close at 3 p.m. We’re looking forward to that. MV
MN Valley Business • JANUARY 2012 • 41
All in the Family
our family.” On Dec. 8, Kelli, Bruce and their kids — Kelsie, 19; Kylie, 18; Kayla, 16; and Bryce, 15 — opened Frozen Yogurt Creations in the Mankato Heights Mall. Since then, they’ve quickly learned that the shop and its serve-yourself concept fits their community well, too.
Profile
Ryan Schmitz started the Creative Closets business to keep himself busy during the winter months when his landscape business slows down.
Creative entrepreneur Ryan Schmitz grows beyond landscaping to closet design By Marie Wood Photos By Pat Christman
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creative. His landscaping work is very creative. That’s why he’s a good hen winter hits southern Minnesota, Ryan Schmitz, landfit with us,” said Mark Deichman, owner and president of Deichscape architect and owner of Aquatic Gardens & Landman Construction. scaping, heads indoors to more confined spaces. Plus in a price sensitive economy, Schmitz’s prices come in just In 2008, Schmitz started a sideline business called Creative Closunder the big guys, added Deichman. ets so he can spend winter and rain days measuring, designing and “He’s a very energetic, creative person. If you’re a young landinstalling organization systems. scaper in Minnesota, you have to figure out what to do for another “That’s why I started the closet company for off-season work,” three months and he’s done that,” said Deichman. said Schmitz of Mankato. Now Schmitz and his Creative Closets business has found a secWhen Schmitz was building his second home, he did a lot of work ond niche in Deichman’s home packages. himself, but his closets were designed and installed by a local com“It’s nice working with Ryan. He has the technology to show 3-D pany. The owner was selling the business. portrayals and that makes designing closets very easy,” said DeichWhile Schmitz didn’t buy the business, he recognized an opportuman. nity. Schmitz had connections with a number of home builders, because he was landscaping their new houses. Schmitz approached them with his idea to open a closet company and the builders said they would use his ■ services. “That was the motivator — knowing Owner, Creative Closets, Mankato that I had contractors lined up,” said Schmitz. Member, Minnesota River Builders Association For instance, Schmitz had been landSupports community fundraisers scaping homes for Deichman Construction in Mankato. In fact, Schmitz dePlays golf, softball and basketball signed and installed the landscaping for the 2010 Minnesota River Builders AsBachelor’s degree in landscape architecture, S. D. State, sociation Dream Home built by Deichman. Graduated Loyola High School, 1995 “Our homes are very custom and
Ryan Schmitz
42 • JANUARY 2012 • MN Valley Business
Outfitting closets
Schmitz works with a wide variety of designs to create organized closet spaces for his customers.
Profile
While contractors can design and install closet fixtures, it makes sense to leave those details to a sub-contractor. When Schmitz enters the process, the closets are usually framed up, but as he measures the closet he sees how to maximize the space. Today’s standard for closets and pantries is melamine laminate shelving that can also be used to create built-in dressers, wardrobes, vanities and shoe racks. It’s available in a variety of wood finishes and colors. Schmitz draws up the plan and faxes it to Shelvi Storage Systems in Sauk Centre. Then Shelvi creates a a computerized drawing of the closet and custom storage system. After client approval, these plans are used by Shelvi to pre-cut all the materials. Next, Schmitz loads up his Creative Closets cube van and installs on site. He hangs rods, installs shelving, and assembles dressers, wardrobes and shoe racks. Accessories for ties, scarves, belts and more are available too. Schmitz also outfits pantries for optimal storage. Clients prefer the laminate shelves over wire shelves, because they clean up easily and baskets can be added to organize and contain potatoes, onions or odd-shaped items. “You can integrate more baskets, spice racks and wine racks. It makes them more functional and interchangeable,” said Schmitz. About 75 percent of Schmitz’s jobs are in new construction and custom homes. Large walk-in master closets and pantries are the norm, but Schmitz installs all the closets in the home. While an entry closet can take 15 minutes, Schmitz can spend nine hours customizing master closets. In addition to new construction, Schmitz also offers closet makeovers. Ginger Leiferman of Madison Lake hired Schmitz to remodel the closets in the bedrooms and playroom, as well as the pantry. “He is easy to work with and very organized. He offered really great suggestions to make the space well-used,” said Leiferman. “With all the options he has, everything has its place now.”
Change of direction
Growing up, Schmitz wanted to be a marine biologist, but college on the East or West Coast wasn’t economically feasible. He always loved being outdoors and in high school he discovered an aptitude and interest in art. “I combined the two. That’s how I got into landscape architecture,” said Schmitz. Schmitz founded his landscaping company in 1998, the summer before he graduated from South Dakota State University with a degree in landscape architecture. His dad encouraged him to start his own business while he was young. “Who cares if you fail? You got the rest of your life to pay it off,” Schmitz recalled his dad saying. So Schmitz bought a pick-up truck and his dad co-signed for the loan, gave him a wheel barrow and shovel, and told him to learn to run a business. When Schmitz graduated from college, he resumed his business and built a landscaping company known for water features, perennial plantings and patios. Today Schmitz employs two full-time and two seasonal employees. To keep his employees working year-round, Schmitz does snow removal for homes, a town home association and Mayo Health System. Creative Closets remains a one-man operation, but he plans to expand the business and launch a Web site. He wants to line up more contractors, travel further and increase his advertising budget. While Aquatic Gardens & Landscaping had its best year in 2011, the greatest perk of owning his own business is flexibility. “Flexibility is worth a lot of money to me, especially now with three young children,” said Schmitz. MV
Schmitz works in his shop to custom design closet spaces.
MN Valley Business • JANUARY 2012 • 43
Business Memos/Company News
Food Co-op receives award The St. Peter Food Co-op and Deli received the Design & Aesthetics Exterior Renovation/Remodel Award in the under 20,000 square feet category, from the Minnesota Shopping Center Association. The co-op was designed by Paulsen Architects. The general contractor was RW Carlstrom. The member-owned co-op opened at its new location in the spring of 2011. The project was selected by a group of industry specialists. The design judging criteria includes the before and after story and the enhancement of the retail structure including: innovative design, construction approach, re-positioning strategies, tenant mix and integration into the community.
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Holiday Inn New Ulm named hotel of the year Holiday Inn New Ulm was honored with the Property of the Year award by the Minnesota Lodging Association. Torgerson Properties owns the hotel and restaurant, which is managed by general manager Rick Neumann and Otto’s Feierhaus and Bierstube manager Marti Bennett. The judges cited the hotel’s combination of old world charm of the German heritage of New Ulm and the modern conveniences travelers expect. The hotel has 124 guest rooms and 4,000 square feet of meeting and event space.
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Networking group names leadership Riverbend Networking BNI Chapter announced its annual leadership change. Tiffany Meyer, PrimeSource Funding is replacing Timothy Guetschow, Fountain Street Design as president; Chad Hacker, Herbalife is replacing David McCandless, Honor Bound Photography as vice president; Brent Pattison, Northwestern Mutual is replacing Shannon Ballman, Payroll Solutions Plus as secretary/treasurer. BNI provides a positive, supportive, and structured environment for men and women to further their business through word-of-mouth marketing. The chapter meets at 7 a.m. every Wednesday at Computer Technology Solutions, 200 Belgrade Ave, North Mankato.
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Daniel Call to head WINCO Ralph Call, chairman and chief executive officer of Dyna Technology Inc., has named Daniel Call as president and chief operating officer of WINCO Inc. and Winpower Inc. in Le Center. Daniel Call has been working as vice president of sales. WINCO is marking its 85th year as a manufacturer of portable, standby and PTO generator systems up to 150kW that are sold throughout the U.S., Canada and in some International markets. Winpower, Inc. manufactures diesel and gaseous power systems. Dyna Technology was established in 1996 as a holding company with various other business interests.
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Knutson, Kelly, Bellig named top lawyers Randy Knutson, Scott Kelly and Dan Bellig, of the Farrish Johnson Law office, have received the Minnesota Lawyer’s Attorney of the Year award for
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their work on the Bearder DNA case. (The case involved families that filed a lawsuit against Minnesota’s health department over its practice of collecting DNA from newborns and then keeping and using the private information.) Honorees were chosen based on leadership in the profession, involvement in major cases or other newsworthy events, excellence in corporate or transactional services and public service. The nominations were submitted by judges, bar groups, clients and fellow attorneys.
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Will Partridge honored William S. Partridge, of Farrish Johnson Law office, has been selected as a Fellow of the Litigation Counsel of America. Partridge is one of the senior litigation attorneys at the firm. A 1975 graduate of Minnesota State University, Partridge received his Juris Doctor degree from Hamline University School of Law. The LCA is a trial lawyer honorary society composed of less than one-half of one percent of American lawyers. Fellows are selected based upon excellence and accomplishment in litigation, both at the trial and appellate levels, and superior ethical reputation.
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Gardner marks 60 years at Bolton & Menk Dick Gardner, a surveyor with Bolton & Menk, recently marked 60 years of service. He began his career in 1951 and continues to work full-time performing land surveys in Nicollet and Le Sueur counties. Gardner began using steel tapes, compass and transit and now uses robotic survey instruments and the Global Positioning System. He was key, in 2006, in working with the Nicollet County Historical Society in locating where the Dakota Indians forded the Minnesota River at a place they called Oiyuwege, near St. Peter.
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Chmielewski joins Pioneer Bank Matt Chmielewski has joined Pioneer Bank as a vice president in the bank’s North Mankato location, according to David P. Krause, CEO. Chmielewski will specialize in business development and serve as a commercial lender in the North Mankato and Mankato area. He has more than five years of experience as a commercial lender in the greater Mankato market and more than 16 years overall.
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Peterson serving on reform task force Douglas R. Peterson, shareholder at Leonard, Street and Deinard and head of the law firm’s Mankato office, has been appointed by the Minnesota Supreme Court to serve on its Civil Justice Reform task force. Peterson and 26 other attorneys serving on the task force are examining civil case processing statutes, court rules and practices, and making recommendations for facilitating more cost-effective and efficient civil case processing. Peterson also was recently appointed by the United States District Court to serve on its Federal Practice Committee, which is responsible for putting into practice new developments in federal civil procedure.
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