Minnesota Valley Business Journal

Fall harvest

Crop farms strong, livestock farms suffer Also in this Issue: • Kroubetz Lakeside Campers • Edenvale Nursery • Mankato Computer Repair

Year-to-date Economic Impact 2011 Total Economic Impact: $40,500,000

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October 2012 • Volume 5, Issue 2

■

■

18

Special Focus: Year-end tax planning

■

Edenvale Nursery

Jim and Betty Koberoski purchased a five acre soybean field south of Mankato in 1974 and have turned it in to a rich oasis. Edenvale Nursery has an inviting grounds with a gazebo and water features among the lush plants for sale.

Corn is king

As they speed toward an early conclusion to harvesting, crop farmers in the region find themselves in a better position than most ag producers in the country. But livestock producers are being pinched by high feed costs.

Two things small business owners can do to minimize the amount of taxes owed are to keep accurate records and choose a professional accountant to help advise them on the ever changing tax laws.

36

22

■

42

Kroubetz Campers

Kimberly and Paul Kroubetz opened Kroubetz Lakeside Campers & Motors in 1999, shortly after they married. Today, daughter Ashley, and Kimberly’s brother, Jeff Michel, are also involved in the growing business.

MN Valley Business • october 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 Joe Spear: Google, Facebook and agriculture?

■ Business Commentary....................

Tonya Rule: To pay or play in health reform

Business informer............................. 8

■

Job trends.......................................10

■

Greater Mankato Growth................28

Celebrating Minnesota Manufactuerers Week

Vehicle, retail, construction trends in the area ■

Regional, state unemployment information

Departments

■

■

Retail trends....................................12 Auto sales, retail sales and hotel business

■

Greater Mankato Growth CVB .......33 Fall fun

Regional Outlook.............................34 Jack M. Geller: Have we lost our rural voice

■

Area commodity prices ■

■

Agriculture Outlook.........................14 Agribusiness trends........................15

Greater Mankato Growth Member Activities . ........................30 Groundbreakings, new businesses, relocations and expansions

■

Kent Thiesse: High land rents increase risk ■

Construction, real estate trends.....11 Building permits, housing starts, home prices, interest rates

Profile..............................................40 Always on Call

Business memos/

Company news................................44

Farrish Johnson announces merger, Eide Bailly ■

Business updates............................16

SuperValu restructures leadership, ADM to market new .

Pionner soy oil, Ackman pushes for General Growth

takeover, and more.

announces promotions, Snell Powersports adds Stihl . ...

franchise, and more.

On the Cover: Doug Wenner and Jeff Leonard grow sod as well as traditional corn and soybean crops on their farm west of St. Peter.

Photo by John Cross

4 • october 2012 • MN Valley Business

20

Brochures Annual Reports Catalogs Magazines Posters Hard and Soft Cover Books Direct Mail and More!

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october 2012 • VOLUME 5, ISSUE 2 PUBLISHER James P. Santori EXECUTIVE Joe Spear EDITOR ASSOCIATE Tim Krohn EDITOR CONTRIBUTING Jack M. Geller WRITERS Tim Krohn Jean Lundquist Tonya Rule Kent Thiesse Marie Wood

PHOTOGRAPHERS Pat Christman John Cross COVER PHOTO John Cross GRAPHIC Jenny Malmanger DESIGNER PAGE DESIGNER Christina Sankey ADVERTISING David Habrat MANAGER ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey

From the Editor

CIRCULATION Denise Zernechel DIRECTOR

For editorial inquiries, call Tim Krohn at 507-344-6383.

For advertising, call 507-344-6390

MN Valley Business is published 12 times a year at 418 South 2nd Street Mankato, MN 56001.

Google, Facebook and agriculture?

Technological innovation can be right down the country road Seems like Google and Facebook make the news every day with the latest innovation or some new high tech media strategy that’s going to be the modern-day version of a get-rich-quick scheme.

The reality, of course, is people like Facebook CEO Mark Zuckerberg have pretty much “gotten rich quick” on a business that sprung from innovative marketing ideas, expanding a small idea into a big one and technological revolution.

Google has grown in a similar fashion.

It now has 2,000 on-the-ground marketing people in New York City because its leaders decided the technology Internet company had to be in the hub of the media and advertising world. And guess what? They found they needed to meet face-to-face with their clients and not just over the social networks of the Internet.

Southern Minnesota agriculture on the other hand barely makes the news once a month, and it considers its key locations places like Lake Crystal, Amboy and Mapleton, where face-to-face business has been going on for decades.

But you might be surprised to find out agriculture has adopted technological innovations in veins similar to the big tech giants.

Southern Minnesota farmers can now seed 50 percent more corn on the same amount of land they did in the 1970s, said Dean Christensen, a DuPont Pioneer research fellow at the company’s Mankato corn research center.

Seed varieties now can be developed to resist drought and disease, to withstand weed killers, and be bred to fit the weather and soil conditions of highly localized areas. Sounds like a Facebook marketing program.

Biotechnology researchers now develop genetic “fingerprints” for corn. Google and Facebook develop user profiles.

But just as high tech companies expand their markets with the use of Internet technology, agriculture does the same but with less sophisticated tools. New rail lines from the Midwest to the Gulf Coast and western ports opened up new markets for Southern Minnesota farmers who were at one time relegated to getting in the truck and driving their corn 60 miles to the river terminal at Savage.

The appetite for agricultural products has also expanded into not only new markets but new locations. The ethanol

6 • october 2012 • MN Valley Business

By Joe Spear industry has become a major corn buyer, creating competition for traditional buyers in the livestock industry. An ethanol plants have sprung up like weeds across Southern Minnesota.

New processing plants for soybeans have also sprung up including a recent addition in Fairmont, adding to the already substantial processing capacity of Mankato’s two soybean plants. That gives local farmers even more outlets for selling their grain.

And agriculture, like the Internet industries, has its share of entrepreneurs.

Our cover feature this month notes that Charles Persson’s family started a small feed and grain elevator in Trimont in the late 1960s. They started dabbling in the commodities markets in 1972 to help their customers get a better price. When farmers got fewer and larger, elevators had to expand their businesses or slowly die out like so many small ones did.

Persson expanded the service part of his business dramatically and now is president of Investors Commodity Services with eight offices in Minnesota and Iowa, including one in Mankato.

Jeff and Natalie Leonard and Doug and Nancy Wenner have also ventured into agro-entrepreneurialism The families, related by marriage, run traditional crop and hog operations but also grow Kentucky blue grass varieties on 20 acres of their farm. It’s a way to diversify their offerings like Google added a social network in Google Plus to compete with Facebook.

The Wenners and Leonards now compete with sod farmers everywhere.

So innovation and entrpreneurialism isn’t limited to the big cities anymore. It can be found at the end of a lot of country roads. MV Joe Spear is executive editor of Minnesota Valley Business.

Contact him at 344-6382 or jspear@mankatofreepress.com

■

Business Informer

Agriculture

2.3 percent in 2011, to further decline by 2.4 percent in 2012. However, projected emissions increase by 2.8 percent in 2013, as coal regains some of its electric-power-generation market share.

Drought-induced high grain prices haves sent hog prices spiraling down.

In September, the price of an 185 pound hog carcass fell nearly $30 from the month before to $63.33. The price was $25 lower than the same month a year earlier.

High grain prices drove up the cost of livestock feed, causing hog and cattle producers to sell off herds, bringing a glut of product to market. The September prices were the lowest in at least two years.

Natural gas prices higher

Pork prices plummet

Grain stays high Meanwhile, grain prices remained high in September with cash corn prices at $7.49 per bushel, down 50 cents from August but well above the $6.91 posted a year earlier.

Soybeans rose to $16.92 a bushel, up 30 cents from the month before and $4 higher than a year earlier.

Energy

■■■

Crude oil prices rise steadily Brent crude oil spot prices have increased at a relatively steady pace from their 2012 low of $89 per barrel on June 25 to their recent high of $117 per barrel on August 23 because of the seasonal tightening of oil markets and continuing unexpected production outages.

The government’s Energy Information Administration expects Brent crude oil prices to fall from recent highs over the rest of 2012, averaging $111 per barrel over the last 4 months of 2012 and $103 per barrel in 2013.

West Texas Intermediate crude oil spot prices rose by a more modest $17 per barrel between June 25 and August 23, as the WTI discount to Brent crude oil widened from $10 per barrel to $22 per barrel. WTI spot prices should average $93 per barrel in 2013.

Oil production up a bit U.S. total crude oil production should average 6.3 million barrels per day in 2012, an increase of 0.7 million barrels from last year. Projected domestic crude oil production increases to 6.8 million barrels a day in 2013, the highest level of production since 1993.

More coal to be used for power Because of the projected increase in natural gas prices relative to coal, the government expects the recent trend of substituting coal-fired electricity generation with natural gas generation to slow and likely reverse over the next year. From April through August 2012, average monthly natural gas prices to electric generators increased by 34 percent, while coal prices fell slightly.

Coal-fired electricity generation will increase by 9 percent in 2013, while natural gas generation will fall by about 10 percent.

CO2 emission to jump in ‘13 Carbon dioxide emissions from fossil fuels, which fell by

8 • october 2012 • MN Valley Business

The Henry Hub natural gas spot price, which averaged $4 per million British thermal units in 2011, will average $2.65 per MMBtu in 2012 and $3.34 in 2013.

Imported fuels falling The share of total U.S. consumption met by net imports of both crude oil and products has been falling since peaking at over 60 percent in 2005. In 2011, it averaged 45 percent, down from 49 percent in 2010.

Electric rates up 1 percent U.S. residential electricity price will rise by 1 percent during 2012 to an average of 11.91 cents per kilowatthour.

During 2013, retail electricity prices increase 0.9 percent over the average 2012 price.

When measured in real terms, the U.S. residential electricity price declines by an annual average of 0.8 percent in both 2012 and 2013.

Renewable energy use falls After growing by 13.8 percent in 2011, total renewable energy consumption is projected to decline by 2.3 percent in 2012. This decrease is the result of hydropower resource levels beginning to return to the long-term average, with consumption falling 13.9 percent.

The decline in hydropower from 2011 to 2012 more than offsets the projected growth in the consumption of other renewable energy forms. Renewable energy consumption increases 2.0 percent in 2013 as hydropower continues to decline (2.2 percent) but non-hydropower renewables grow by an average of 4.1 percent.

Under current law, federal production tax credits for windpowered generation will not be available for turbines that begin operating after the end of 2012.

Wind-powered generation, which grew by 26 percent in 2011, is forecast to grow an additional 18 percent in 2012.

The outlook for wind capacity additions and generation in 2013 will likely respond to whatever decision is made regarding the extension of production tax credits.

Ethanol rebounds next year As a result of drought conditions affecting corn harvests throughout the Midwest, ethanol production fell from an average of 887 thousand barrels per day in June 2012 to 808 thousand July, and then modestly rebounded to 822 thousand barrels in August.

Ethanol production will average 830 thousand barrels a day over the second half of 2012. Forecast ethanol production recovers in the second half of 2013, averaging 870 thousand barrels per day (13.3 billion gallons) for the year. The projected lower ethanol production is generally matched by lower ethanol exports.

Biodiesel production averaged about 63 thousand barrels per day (967 million gallons) in 2011. Forecast biodiesel production averages 70 thousand barrels a day in 2012 and 75 thousand barrels per day in 2013.

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Initial unemployment claims

Minnesota initial unemployment claims

Business Barometers

Nine-county Mankato region

Major industry

’11

August ’12

Percent change ’11-’12

Construction Manufacturing Retail Services Total*

94 113 68 234 509

97 154 51 201 503

+3.2% +36.3% -25% -14.1% -1.2%

2011

2012

130,000

110,000

1,000

A

M

2,657 2,867 1,591 6,412 13,527

2,356 2,108 1,359 5,358 11,181

-11.3% -26.5% -14.6% -16.4% -17.3%

2011

J

J

A

Local number of unemployed

S

O

N

2011

Nine-county Mankato region

D

2012

J

F

M

A

M

J

J

A

S

O

N

D

Minnesota number of unemployed 2011

8,316 7,051

10,000

0

2012

2,808.3 2,823

3,000 2,000

M

Percent change ’11-’12

Minnesota non-farm jobs

120,000

F

’12

(in thousands)

126,172 126,284

J

’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

August

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

2012

201,424 168,343

225,000

8,000 200,000

6,000 4,000

175,000

2,000 0

J

F

M

A

M

J

J

A

S

O

N

August

2011

Unemployment rate

5.4%

5.0%

55,153

5,393

3,151

2,928

2012

Source: Minnesota Department of Employment and Economic Development

10 • october 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 August 2011 August 2012 5.6% 4.8% 6.3% 6.9% 5.9% 5.1% 4.9% 5.5% 6.5% 6.2% 6.2% 9.1%

5.1% 4.9% 5.6% 6.3% 5.3% 4.9% 4.9% 5.7% 6.2% 5.7% 5.6% 8.2% J. Malmanger

Residential building permits Mankato 2011

2012

(in thousands)

Residential building permits North Mankato (in thousands)

2011

$3,000

$1,698.5 $2,243.9

2012

$8,000 $2,000

$6,000 $4,000

$1,000

$2,000 $0

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of Mankato

$0

Existing home sales: Mankato region 2011

2012

148 175

200

Information based on Multiple Listing Service and may not reflect all sales

20

50

10 M

A

M

J

J

A

S

O

N

D

Commercial building permits Mankato $9,000

M

J

J

A

S

O

N

D

(in thousands)

$1,822.5 $1,086.3

2012

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

2012 6 15

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

2011

A

2011

100

F

M

40 30

J

F

Housing starts: Mankato/North Mankato

150

0

J

Source: City of North Mankato

Commercial building permits North Mankato (in thousands) $12,000

2011

$2,844.3 $100

2012

$9,000

$6,000

$6,000 $3,000 $0

$3,000 J

F

M

A

M

J

J

A

S

O

N

D

2011

County

2012 4.5%

5.0% 4.5% 4.0%

3.6%

3.5% J

F

M

Source: Freddie Mac

F

Foreclosures:

Interest rates: 30-year fixed-rate mortgage

3.0%

J

M

A

M

J

J

A

S

O

N

D

Source: City of North Mankato

Source: City of Mankato

5.5%

$0

A

M

J

J

A

S

O

N

D

Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan

2012 second quarter 2011 2012 48 10 8 32 13 17 14 10 4

41 13 10 26 13 14 19 16 3

Percent change -14.6% +30% +25% -18.8% 0% -17.6% +35.7% +60% -25%

Source: Minnesota Foreclosure Partners Council J. Malmanger

MN Valley Business • october 2012 • 11

Business Barometers

$10,000

$2,040.9 $2,401.1

Vehicle sales 2011

Business Barometers

Sales tax collections

Mankato — Number of vehicles sold 1,050 2012 843

1,200

$500

1,000

Includes restaurants, bars, telecommunications and general merchandise store sales. Excludes most clothing, grocery store sales.

$363.6 $383.6

$400

800

$300

600 400

$200

200

$100

0

Mankato 2011 2012

(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 2011

$50,000

2012

J

F

M

A

M

J

J

A

S

O

N

D

Source: Sales tax figures, City of Mankato

Mankato food and beverage tax

Mankato/North Mankato $32,533 $40,220

2011

$75,000

$40,393 $37,663

2012

$40,000 $50,000

$30,000 $20,000

$25,000

$10,000 $0

J

F

M

A

M

J

J

A

S

O

N

Source: City of Mankato

D

$0

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of Mankato J. Malmanger

Gas prices-Mankato 2012

2011

$4.00

$3.95

$3.00 $2.00

$3.69

$1.00 $0

J

F

M

A

M

J

J

A

S

O

N

D

2012

2011

$3.94

$3.00 $2.00

$3.71

$1.00 $0

J

F

M

Source: GasBuddy.com

A

M

Aug. 13

Sept. 12

Percent change

Archer Daniels

$25.93

$27.19

+4.9%

Ameriprise

$54.32

$56.66

+4.3%

Best Buy

$19.48

$18.58

-4.6%

Crown Cork & Seal

$36.60

$37.04

+1.2%

Fastenal

$42.20

$42.68

+1.1%

General Growth

$18.63

$19.91

+6.9%

General Mills

$38.50

$39.30

+2.1%

HickoryTech

$10.67

$10.44

-2.2%

$1.64

$1.71

+4.3%

Itron

$43.90

$45.34

+3.3%

Johnson Outdoors

$21.10

$21.18

+0.4%

3M

$92.40

$90.81

-1.7%

Target

$62.51

$64.38

+3%

U.S. Bancorp

$33.18

$33.94

+2.3%

Wells Financial

$17.25

$16.85

-2.3%

Winland

$0.65

$0.42

-35.4%

$28.75

$27.93

-2.9%

Hutchinson Technology

Gas prices-Minnesota $4.00

Stocks of local interest

J

J

A

S

O

N

D

J. Malmanger

12 • october 2012 • MN Valley Business

Xcel

J. Malmanger

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For information on including your service to this directory, please contact

507-344-6390

Higher cash rental rates increase risk Agricultural Outlook

T

he continued strength in corn and soybean commodity prices in the past few months, and the resulting projected increase in crop income per acre, has caused many landlords to consider significant increases in cash rental rates on farm land for 2013. This comes after substantial increases in most rental rates from 2008-2012.

Many crop producers are concerned that the favorable crop prices may not last long term, and that the gross income per acre in future years may not be high enough to justify the higher cash rental rates. In addition, crop

By Kent Thiesse input costs for seed, fertilizer, chemicals, fuel, and crop drying are likely to be crop year, and most cash rental rates for higher in 2013.

2012 were probably 10-15 percent Some landlords in southern higher. Average land rental rates in Minnesota asked for substantial south-central Minnesota increased by increases in rental rates for 2012 and are an average of 12.8 percent from 2010 now considering further increases for to 2011 and increased by an average of the 2013. Also, some larger producers 10.8 percent per year from 2007-2011. have been going into new areas and The land rental rates in the U of M offering much higher land rental rates summary include both rental than existing cash rental rates for the agreements between family members, as 2013 growing season, reflecting the well as non-family members. Rental higher grain prices. rates on agreements between family Farm operators are put in a difficult members tend to be somewhat lower position when landlords demand much than the average rental rates in a given higher cash rents for 2013, because they area. The data also includes some cash do not want to lose the crop acres, and rental leases that are longer than one may have already prepaid some of the year, which may also be slightly lower crop expenses for seed, fertilizer and the average. chemicals for the 2013 growing season.

Although current cash prices for corn Total cash expenses for corn production and soybeans are very strong, local cash are expected to increase slightly for prices for the Fall of 2013 are below $6 2013, after a rise of about 10-20 percent per bushel for corn and below $13 per for 2011 and 2012, bushel for soybeans. At normal yields It is primarily due to increases in seed and cost of production, many producers and fertilizer costs. Landlords are also will be looking at break-even market put in a difficult position when another prices for 2013 near $5 for corn and farm operator offers them a substantial $12 for soybeans. These price levels or increase in annual land rental rates, as lower could become reality with more compared to the current cash rental normal crop weather patterns during payment they are receiving from a longthe 2013 growing season. Many farm term farm operator. The University of operators are concerned that if land Minnesota Extension Service puts out rental rates become too high for 2013, an updated summary of rental rates it may be very difficult to break-even, each year. The summary is comprised of with more normal growing conditions actual cash rental rates paid by farm next year. operators in the previous years. The Whether a new Farm Bill is passed or summary released in July of 2012, listed not for the 2013 growing season, the the following per acre average cash guaranteed direct payments that farm rental rates in 2011: operators have received for the past • Blue Earth County: $194 couple of decades will likely be • Brown County: $173 eliminated in 2013. The direct • Faribault County: $194 payments amount to an average of • Le Sueur County: $179 about $25 per acre for corn and soybean • Martin County: $210 producers in most South Central • Nicollet County: $197 Minnesota counties. Most landlords • Waseca County: $175 have included that direct payment • Watonwan County: $177 amount into the land rental rates.

Again it should be pointed out that these land rental rates were for the 2011 14 • October 2012 • MN Valley Business

■ “Flexible cash leases agreements can be a good strategy as an alternative to extremely high straight cash rental rates.”

An alternative to the proposed high cash rental rates for 2013 may be for producers and landlords to consider a “flexible cash lease” rental agreement, which allows the final cash rental rate to vary as crop yields and market prices vary, or as gross revenue per acre exceeds established targets.

A “true” flexible cash lease allows for the landlord to receive additional land rental payments for a crop year above a “base” land rental rate, if the actual crop yields and market prices, or the gross revenue per acre, exceed established base figures. A true flexible cash lease would also allow for the base rent to be adjusted downward, if the actual crop yields and prices, or revenue per acre, fall below the established base figures.

However, many flexible leases have been modified, and only “flex” upward with added rental payment to the landlords, if the base crop yield and prices, or revenue per acre, are exceeded.

The modified cash lease approach is probably acceptable if the base cash rental rates are within a reasonable range.

There are many variations to setting up a flexible lease agreement between a landlord and farm operator. The key, regardless of the agreement, is that both the landlord and tenant fully understand the rental agreement, and the calculations that are used to determine the final rental rate.

Utilizing flexible cash leases agreements between farm operators and landlords can be a good management strategy as an alternative to extremely high straight cash rental rates. 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 2012

2011

$8.00

Soybean prices — southern Minnesota

(dollars per bushel) $7.49

$12.00

$4.00

$8.00

$6.91

$2.00 J

F

M

A

M

J

J

A

S

O

N

D

$0

M

A

M

J

J

A

S

O

N

D

$87.62

$22.00

$90.00

$20.00

$80.00

F

M

A

M

J

J

A

S

O

N

$23.23

$18.00

$63.33

$70.00

Minimum prices, class I milk Dollars per hundredweight

2012

2011

$24.00

$100.00

J

F

Milk prices

185 pound carcass, negotiated price, weighted average

2012

2011

Source: USDA

J

Source: USDA

Iowa-Minnesota hog prices $110.00

$12.95

$4.00

Source: USDA

$60.00

Business Barometers

$16.00

$6.00

$0

2012

2011

$20.00

(dollars per bushel) $16.92

$16.00 D

$14.00

$18.35 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

there for

you

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Updates: Business news, local relevance

■ ■

Businesses want more insurance info

Chamber groups and health care-business executives say Minnesota officials need to give them more information on how a state health-insurance exchange will work as they try to meet a November deadline.

Minnesota Public Radio reports that critics say the Minnesota Department of Commerce, charged with drafting rules for the exchange, which is part of the new federal health law, aren’t being transparent enough. More information isn’t likely to come soon — Gov. Mark Dayton said that the administration won’t make final decisions until after the Nov. 6 election.

Health exchanges — online marketplaces where consumers and small businesses can shop for insurance plans — are one of the central parts of the federal health care reform plan. But there’s little consensus for one in the Republican-led Legislature, even though some GOP legislators and the Minnesota Chamber of Commerce say it’s needed.

Updates

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Supervalu’s leadership restructured

CEO Wayne Sales said that a restructuring of Supervalu’s leadership team is “designed to address two of our most immediate priorities: driving profitable sales in our retail stores and taking costs out of the business.”

Grocery retailer Supervalu announced a series of leadership changes that it says will help turn the struggling company around. President, CEO, and Chairman Wayne Sales, who replaced ousted CEO Craig Herkert in July, said in a statement that the company is “moving quickly to reinvigorate Supervalu, and that starts with leadership.”

Eden Prairie-based Supervalu has been closing stores, cutting jobs, and lowering its debts in a major turnaround effort, and it said last month that it is seeking a buyer.

Supervalu is among Minnesota’s five largest public companies based on revenue. It serves customers through a network of approximately 4,400 stores and has about 130,000 employees.

The company reported a net loss of $1 billion on net sales of $36.1 billion in its most recently completed fiscal year.

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ADM to market Pioneer’s new soy oil

DuPont Pioneer and Archer Daniels Midland Company announced that ADM will contract for Pioneer’s Plenish high oleic soybeans in 2013 with the intention of marketing the high oleic soybean oil for use by the food industry in 2014.

Pioneer has promoted Plenish as a zero trans fat soybean oil that will better withstand the heat of commercial fryers for longer periods.

The soybean oil industry has had to resort to hydrogenation to stabilize vegetable oils, which introduced trans data into the oil. Federal regulations requiring labeling of trans fats in foods since 2006 has created the need for an alternative process.

ADM will contract with soybean growers in the Frankfort, Ind. area to produce Plenish high oleic soybeans for its first growing season in 2013 DuPont Pioneer is the first to market a high oleic soybean that will provide an alternative solution for food companies and foodservice operators and new market opportunities for soybean growers.

16 • october 2012 • MN Valley Business

■ Ackman pushes General Growth takeover Bill Ackman’s Pershing Square Capital Management, the second-largest investor in General Growth Properties, urged the mall owner to enter negotiations for a takeover by rival Simon Property Group Inc. General Growth should “immediately form a special committee” and “initiate negotiations with Simon promptly,” Ackman said in a letter to General Growth’s board.

“We believe the Simon transaction is in the best interest of GGP shareholders and will have a positive impact on substantially all other stakeholders.”

General Growth, which owns River Hills Mall in Mankato, exited bankruptcy protection in November 2010 following a takeover battle between Indianapolis-based Simon, its larger competitor, and an investor group that included Pershing Square and Brookfield Asset Management Inc. A takeover by Simon may be hard because Brookfield, General Growth’s largest investor, has said it doesn’t want to sell its shares.

Brookfield has a 42 percent stake in General Growth.

■

Xcel promoting “solar gardens”

Xcel Energy Inc.’s 10 new “solar gardens” will be scattered across the utility’s Colorado service territory, the company said.

Solar gardens is the name given to commercial-sized solar power systems, capable of generating between 10 kilowatts and 2 megawatts, that allow subscribers who can’t put solar panels on their own home or business to buy into or lease a portion of a solar garden.

Subscribers get credit on their electricity bills for the solar power generated by the panels they have in the solar garden.

Xcel is subsidizing the solar gardens.

Xcel expects to install 9 megawatts worth of solar gardens in 2012 and another 9 megawatts in 2013.

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Kwik Trip tops mystery-shopper study

For the third time in four years, Kwik Trip Inc. has taken the No. 1 rank in the CSP-Service Intelligence Mystery Shop, an annual study now in its eighth year.

The 410-store Midwest convenience store chain reclaimed the title after dropping to second place behind last year’s winner, Sheetz Inc., Altoona, Pa. La Crosse, Wis.-based Kwik Trip was ranked by secret shoppers, who assessed pump-island cleanliness, clerk sincerity and what restrooms looked like.

Read us online!

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Special Focus: Tax planning and

Ongoing record-keeping is key

By Marie Wood

Margaret Stenzel Margaret Stenzel is an accounting instructor at Rasmussen College who earned her MBA at Minnesota State University and a master’s certificate of accountancy from DeVry Keller University. A member of the American Institute of Certified Public Accountants and the Institute of Management Accountants, Stenzel is current on tax law changes for individuals and businesses and well versed in tax strategies for small businesses.

“The goal for both individuals and for small business owners is to minimize the amount of taxes owed, therefore tax planning is important,” said Stenzel.

Here are Stenzel’s tips on effective tax planning year-round, as well as things you can do to prepare your books for yearend.

Two things small business owners can do to minimize the amount of taxes owed are to keep accurate records and choose

a professional accountant to help advise them. Each year tax laws change and a professional accountant will be familiar with the laws that have expired and the new laws that are taking effect.

Business owners can help in tax planning by keeping good records. Accurate record keeping helps the business owner monitor their progress and helps to identify sources of income and document expenses incurred by the business.

The fourth quarter is a good time to make sure things are in order. Here are some documents to collect and records to gather.

Get income receipts together. This could include deposit slips, 1099 Miscellaneous forms, cash register receipts and invoices.

Purchases are items bought for the business and resold.

Canceled checks and invoices can document purchases and other expenses incurred while doing business.

Other records business owners will want to keep include asset invoices, improvements and deductions.

Employment tax records are needed to prepare year-end taxes. A professional accountant can help your business distinguish employee wages from independent contractor wages.

Expenses for travel, entertainment and gifts are limited and a professional accountant can help determine what is deductible. Tax planning occurs throughout the year. Good record keeping and a professional accountant can help the small business owner minimize the amount of taxes owed.

The IRS web site has helpful information for business owners. Visit irsvideos.gov for a series of short helpful videos.

MV

Are you eligible for health care tax credits?

If you have fewer than 25 employees, you pay an average wage of less than $50,000 per year, and you pay at least half of your employee health insurance premiums, you are eligible. Search health care tax credit at irs.gov. MV

18 • october 2012 • MN Valley Business

preparation Small business tax preparation tips The following tips are an excerpt of an article written by Caron Beesley and posted on the Small Business Administration website, sba.gov.

1) Gather your records and check your books Whether you are an independent contractor or growing small business, spend some extra time as the calendar year draws to a close examining your books and records. Make sure everything is accurate and up-to-date, and that records and documentation that help support the numbers in your tax return are clearly organized — this includes old tax forms, expense receipts, bank statements, etc.

2) Understand what deductions can do for your small business Now is the time to increase your expenses so that you can maximize your business tax deductions before the end of the year. From stocking up on office equipment; making charitable donations; to paying bills early (utilities, phone bills, etc.) — all these affect your deductible bottom line.

Taking all the deductions you deserve can be a tricky business and, as a small business owner, getting it wrong can be costly. Not least of all when it comes to understanding what business tax deductions you are eligible to claim.

3) If cash flow permits, defer income earned Depending on your business structure, you may be able to make some inroads to reducing your overall taxable earnings for the current tax year by deferring any payments you receive for services or products rendered until the first week of January. This will defer your tax owed on this income until April 2014.

If you are a sole proprietor, LLC, S Corporation, or in a legal partnership, income deferral can make good sense, especially if you don’t foresee any significant changes to your income tax rates in the new year. If unsure, make sure to check with a professional tax advisor. However, if you have any doubts about the solvency or future of your clients, don’t defer. Collect those payments soon as possible.

4) Understand your obligations as an employer January and February are busy reporting months. If you have hired employees for the first time, or have used independent contractors in the past year, it’s worth familiarizing yourself with tax reporting obligations and deadlines that will hit early in the new year.

Employees — As an employer you must provide your employees with W-2 forms by January 31. W-2 forms must also be filed with the Social Security Administration, showing wages paid and taxes withheld for the year. This must be accompanied by your W-3 form (which shows the total of all W-2s) by the end of February.

Independent contractors — If you have paid an independent contractor or other business who is not your employee at least $600 during the year, you should have been maintaining W-9 forms, contractor’s business licenses and certification of insurance during the year. The end of January is the deadline for sending each independent contractor a completed copy of

Form 1099-MISC to report payments made to that contractor.

To help small business owners stay on top of key tax deadlines, IRS provides a free tax calendar at irs.gov.

5) Set-up or contribute to a retirement plan By setting up and/or making a contribution to a 401(k), Roth IRA, SEP, or KEOGH plan — you can reduce your annual taxable income. Check your plan’s allowable contribution limit for the year and talk to your accountant about what makes sense for your business. MV

Online resources IRS Small Business and Self-Employed Tax Center is the definitive website on business taxes and includes an A-Z Index for forms and publications, tax calendars, deducting expenses, employee taxes, EINs, filing and a video portal.

Visit irs.gov and search small business tax center.

Then bookmark the site.

U.S. Small Business Administration is an excellent reference on business taxes. Visit sba. gov and search business taxes.

American Express Open Forum (openforum. com) has practical tips on subjects important to small business owners. Articles are written by top business experts. To view an article titled “Business Taxes Decoded 2012,” visit http:// www.openforum.com/articles/business-taxesdecoded-2012.

MN Valley Business • october 2012 • 19

Business Commentary

Health care reform: To pay or play?

I

n 2014, the Patient Protection and Affordable Care Act will require companies who employ more than 50 fulltime equivalent employees to provide health insurance coverage; send employees to an Exchange and pay a penalty of $2,000 per employee per year (excluding the first 30 employees if at least one employee goes to an Exchange and receives subsidized coverage); or develop a new hybrid health insurance plan.

Employers who elect to provide health insurance for their employees will be subject to a $3,000 penalty for any employee who finds the coverage to be unaffordable and receives an Exchange subsidy. “Unaffordable coverage” is defined as an employee’s “self-only” premium that exceeds 9.5 percent of the employee’s wages.

Integral to this reform, is the mandate that by 2014 each state must operate a health care Exchange (or co-op with other states) to provide individuals a range of affordable health insurance plans to choose from. Through an Exchange, individuals who meet income guidelines will be eligible for subsidies to pay for premiums.

The dilemma most companies now face is whether or not it makes business sense to extend coverage to all employees, elect not to provide coverage and pay the annual penalty, or develop a hybrid plan. Businesses must consider how their decision will impact their employees, as well as predict how many employees would be eligible for the small and large subsidies offered through an Exchange. This can be complicated.

Several things remain to be seen: Will an Exchange offer comparable plans?

Will Exchange rates truly be lower than what employersponsored plans cost now?

How effective will the Exchanges be?

What will the reaction be from employees?

Calculating the “pay or play” option Because of the perceived cost-savings of dropping coverage, it can be tempting for organizations to simply opt for the penalty — without taking the time to determine if, indeed, this is the best business move. ...

Multiple factors must be considered before making the decision to discontinue or retain employer-sponsored health insurance coverage. These include: The current and future cost of health insurance coverage vs. annual mandated penalties The impact dropping health insurance coverage may have on acquisitions and employee retention The Jones’s Factor — what other companies do and how it affects competitive advantage The potential cost savings and how that money can be used in other areas of the business Employee perceptions Before we discuss the economics, it’s important to note that a legitimate concern companies have is over the perception employees and prospective employees — including executivelevel talent — will have if they do indeed discontinue providing coverage. How will not offering health plans impact their employees? If a company elects not to provide coverage,

20 • september 2012 • MN Valley Business

■

By Tonya Rule

“If an Exchange operates as effectively as intended for individuals, then health benefits may become less of a factor in hiring and retaining employees.”

but its competitors do — will that affect its ability to attract and retain employees? These are questions that must be carefully thought out.

Economic realities Beyond the HR impact, for many companies cost will be a determining issue. Determining what makes the best business decision based on cost, is a crucial piece of the puzzle.

Some organizations will find that it just makes sense to extend their current health plans to all employees, but will need to carefully calculate premiums and pay scales to ensure that premiums are not deemed unaffordable. Others, particularly small businesses and those with large numbers of part-time or seasonal workers, may find that the money saved by discontinuing coverage and paying the penalty is worth it.

How to determine the cost factor Eide Bailly has developed Employer Health Reform Analytics — a service that allows us to help businesses with more than 50 full-time equivalent employees or growing companies analyze the economic effect that extending coverage, sending employees to an Exchange and paying the penalty, or developing a new hybrid plan will have on their bottom line.

The government subsidies are broken into four categories based on an employee’s income level compared to the federal poverty level guidelines. By taking an employer’s W-2 salary information and making calculated estimates (which may or may not include single vs. married employee rates, depending on available data), the tool will help determine what category a company’s employees will fall into.

The information will identify how many employees will fit into each category and provide estimated premiums to show what effect discontinuing coverage will have on employees. It can also provide a cost-estimate for various scenarios to analyze which option makes sound business sense.

As health care reform approaches, now is the time to become aware of the options, responsibilities and potential impact this will have on your business and employees. MV Tonya Rule is a health care reform expert, tax manager, and CPA with Eide Bailly in Mankato: trule@eidebailly.com

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Cover Story Doug Wenner (left) and Jeff Leonard grow sod as well as traditional corn and soybean crops on their Timber Lake Sod farm.

Ag sector mixed Crop farmers soaring, livestock producers pinched

By Tim Krohn | Photos by John Cross 22 • october 2012 • MN Valley Business

Yields in south-central Minnesota aren’t record-setting, but they are much better than in most of the Corn Belt.

A

Not your father’s corn seed One of the pleasant surprises for most area farmers was the relatively strong yields this fall, despite a summer that featured stifling heat and scant rain.

Dean Christensen, a DuPont Pioneer research fellow at the company’s Mankato corn research facility, said the relatively good yields in challenging conditions are a result of decades of seed research and development.

“Our years of research and field tests have greatly improved the stress resistance of corn.”

Having corn plants that are drought, insect and disease resistant means not only bigger ears and kernels, but the ability to grow more plants in the same space.

“In the ‘70s, planting 20,000 to 24,000 (corn) plants per acre was the norm. Now, many are planting 36,000 or 38,000 seeds per acre. That’s a 50 percent increase in the planting rate.”

So how much further can yields be pushed?

“There is a limit, but where it is, I don’t know. Looking at average yield gains on a yearly basis, there’s been no drop-off.

Hot, fast commodity markets Charles Persson has experienced the changes brought by consolidation and technology in agriculture more than most.

In the late 1960s, his family started a small feed and grain elevator business in Trimont. In 1972 they started dabbling in the commodities markets to help their customers market their grain.

As farms got fewer and larger, the small grain elevators began to dwindle and Persson expanded the service end of the business dramatically. Today, Persson is president of Investors Commodity Services with eight offices in Minnesota and Iowa, including in Mankato.

Most of their customers are corn and soybean farmers with a significant number of hog operations as well.

“Farmers are looking for risk management, price protection,” Persson said.

That risk management is done through futures contracts, a process that Persson said many people wrongly view as too highly risky.

“If you’re hedging, futures limit risk. They don’t add risk.”

He said problems in futures trading come from a few unscrupulous investment shops and from speculators who aren’t producing crops or livestock.

“The problem is you get people who think they’re smarter than the market. Instead of raising the corn and selling it, they’re out buying and selling on the market.”

As farm operations become larger, more sophisticated and more profitable, hedging is becoming more popular. Still, Persson said, farmers who are only accustomed to selling their products on a cash contract need guidance.

“The learning curve is pretty steep with futures. To get them to use futures for a cash management risk protector is tough sometimes.”

“The farmers I’ve worked with for 30 years, they have no problem with it. We can add 60 to 80 cents a bushel to cash contracts if they use futures properly.”

Persson has watched a number of dramatic changes in agriculture. In the early ‘70s, world food shortages and heavy

MN Valley Business • october 2012 • 23

Cover Story

s they speed toward an early conclusion to harvesting corn and soybeans, crop farmers in the region find themselves in a better position than most any ag producers in the country.

The plentiful rains of spring got crops going well and a hot dry summer had less impact on yields than many had feared.

“Crops turned out a lot better than I thought they would,” said Jeff Leonard, who with his brother-in-law Doug Wenner farms 1,500 acres of land near St. Peter.

While the national average corn yield is predicted to be about 120 bushels per acre, local farmers have seen substantially higher yields. The same trend is expected in soybeans.

The severe drought in much of the nation has meant lower yields and record-high grain prices. That’s been good for crop farmers but not for livestock producers who are paying dearly for livestock feed.

High prices also have put pressure on ethanol plants and will raise prices at the grocery store for consumers.

I don’t think that can go on forever, but I don’t think we’re at the end of potential yield improvements yet.”

The way Christensen and other crop researchers go about their work is more complex than ever.

“The big changes are the uses of genetic fingerprinting information as well as the field data to make decisions on what parents and what potential hybrids we want to move forward.”

“We need people with the laboratory ability to get those fingerprints and to analyze and associate them with higher yield and better standability and disease resistance.”

DuPont Pioneer is in the midst of a major expansion of the Mankato research facility as they add staff.

“Our research is really focused on southern Minnesota — Rochester to Worthington to the Iowa border,” he said.

“Some of the improved hybrids can be planted across the whole northern U.S. Other hybrids are more locally adapted.”

Cover Story

someone wants to get into or out of something.”

Corn, soy, hogs — and sod Corn may be king, but soybeans and hogs are the other two legs on the stool of the local farm economy.

And niche markets continue to grow, from vegetable farms and Community Supported Agriculture to honey production and sod farms.

Jeff and Natalie Leonard and Doug and Nancy Wenner farm together west of St. Peter and grew up in traditional crop and hog operations — something that’s still the key part of their business.

But the families, related by marriage, also grow Kentucky blue grass varieties on 20 acres of their farm. “l was interested in it a long Dean Christensen, a DuPont Pioneer research fellow at the company’s Mankato corn research time ago but never got it facility, says seed research has created hardy, high-yield corn plants. going. We started it in 2003, selling to landscapers and whoever,” Jeff Leonard said. demand by Russia sent markets into gyrations and began the A lot of the sod was sold to an installer in the southern metro globalization of commodity trading.

The development of better rail lines for moving grain also area. “Then things went south in the housing industry,” he had a major impact on the Midwest, he said. “Before, said.

With a changed market, they began laying down more sod everything had to go to Savage and onto a barge and down the river. We were at the end of the pipeline then. That changed on their own for customers such as Gustavus Adolphus College in St. Peter. with big trains going to the coasts and Gulf.”

Sod farming brings different challenges. “August is the best The latest changes have been heavy demand for local corn by area ethanol plants and feed demand from large hog operations. time to plant it, but if there are row crops on the land, they “And the soybean plants in Mankato and Fairmont are big aren’t out yet and you have to wait until October, which doesn’t markets for farmers. So now our corn and soybeans don’t have work quite as well.”

They can also do “dormant seeding” in which seed is put to go so far. It’s a big change.”

And hog markets — while now being pressured by the high down right before price of feed — have fueled a large portion of the regional ag the first snow — a tricky thing to sector.

“With China and world markets developing more, people time.

“So we’ve been have gotten a taste for meat. Meat exports have just become huge.” Persson sees some near-term areas of concern in seeding a lot in the spring, which agriculture.

“High input costs for farmers is a concern. They’re just going is OK except when the wind out of sight.

“We’re trading at over 8 bucks for corn now and I know it’ll blows it to the county,” be down below $4 before long. But their inputs costs aren’t next going to go down.” Still, he’s bullish on agriculture. “Farmers Leonard said.# are so proficient and so efficient, they can cover our demand. Like all crops, this It’ll be tough this year because of the drought, but it’ll come year’s sod was hurt by the drought back.”

As for Persson and his dozens of brokers, the global, high- that started last tech trading is a long way from the small grain elevator he fall. “Some of what we planted helped run in Trimont.

“We trade 24 hours a day now. We still need to get some last fall didn’t sleep, but there’s always someone who’s awake at 2 a.m. and take. It grew up a little and then it decides they want to do something,” Persson said.

“We all have iPads at our bedside so we can do things if dried up and it

24 • october 2012 • MN Valley Business

Farmers began harvesting corn in mid-September, three to four weeks earlier than normal.

Ethanol vs. hogs The severe drought across much of the Midwest Corn Belt has reignited the food vs. fuel debate in southern Minnesota.

Federal requirements aimed at reducing pollution from vehicles and reducing the need for foreign oil mean that at least 10 percent of gasoline must contain ethanol. That percentage is likely to climb.

The growth in ethanol has meant area farmers have a steady, nearby customer for their corn.

It also means corn going to ethanol can’t go to make feed for livestock, including cows and hogs. With the drought

driving corn prices to record highs, area hog producers argue the federal requirements and subsidies given to ethanol leave them unable to profitably raise meat for consumers.

“It’s not good. People are wondering if they’ll even have enough feed,” said Jim Compart of Compart’s Boar Store near Nicollet.

He is part of the third generation of Comparts operating what is one of the largest family-owned swine genetics business in the Midwest. They also have a Compart Duroc premium pork label.

They raise about 10,000 hogs.

About 75 percent of a hog’s diet is corn. Feed costs to raise a pig have increased more than $25 per pig since June, Compart said. But the worst is yet to come. “There will be a $40 to $50 loss per pig by December.”

The pork industry has been calling on the federal Environmental Protection Agency to allow a waiver that would temporarily require less ethanol production to free up corn for livestock feed.

“This is a crisis situation. If ethanol producers aren’t making money anyway, don’t have them burn up our food,” Compart said.

The ethanol industry says the fuel mandates are good policy for the environment and the nation and argue that the waivers would have a negligible effect on corn prices.

There are differing accounts of just how much corn goes to ethanol production. It is commonly stated that some 40 percent of all corn in the U.S. is being used to make ethanol.

The ethanol industry says that figures is badly distorted.

That’s because a good portion of the corn that goes into an ethanol plant ends up as a byproduct that is used in livestock feed. The ethanol industry says only about 16 percent of the nation’s corn actually goes to produce the ethanol itself.

While livestock farmers are being pressured by high feed prices, the high cost of corn is also pinching ethanol producers.

There has been about a 20 percent drop in ethanol production and some plants have been temporarily idled. MV

MN Valley Business • october 2012 • 25

Cover Story

didn’t rain again.

It takes a year from planting until the sod is ready to be cut.

He said the sod doesn’t take with it as much dirt as people assume. “There’s not as much soil on the sod as it looks like. If you washed the dirt off a whole row of sod, you’d have a spade full of dirt.”

He noted that another area sod farm has been sodding for 40 years on the same ground. “I don’t think they’ve lost any (soil) depth at all.”

Sod can be a good crop for marginal land, he said. “We have low, peat ground we use. It firms up the soft peat ground over time.”

The two farm families were recently chosen as the 2012 Nicollet County Farm Family of the year.

The farm was started in the mid 1800s by Jacob Leonard (Jeff and Nancy’s great-great grandfather).

Study finds gap in Minnesota’s ag education system Crop farmers soaring, livestock

By Tim Krohn

Cover Story

E

ven as farming and agribusiness become more complex and larger, public education systems have steadily cut back on agricultural education and ongoing training.

Brad Finstad says the gap in training is increasingly being filled by the private companies that sell products and services to farmers. “The farm community has searched out and found its own support and experts to provide educational advice. It’s the Brad Finstad suppliers, the very people selling them things,” said Finstad, president and CEO of the Center for Rural Policy and Development, based in St. Peter.

“If they want to learn about genetics, they go to their seed dealer; if they want to learn about fertilizer, they go to their co-op.”

While he thinks the private sector has done a good job in filling part of the need, Finstad believes colleges and universities can and should promote and boost their role.

Finstad was involved in a new study done by the Minnesota State Colleges and Universities system to identify education needs of farmers. The Farm Business Management programs at eight MnSCU campuses — including at SCC in North Mankato — are the major providers of public education farm training.

“The big question remains if farmers” needs are being met. The private sector finds out what people want and are providing a lot of it. But there should always be a strong public education aspect, be it the University of Minnesota Extension or MnSCU,” Finstad said.

“If you’re relying totally on your fertilizer dealer for advice, farmers might ask, “Are you just trying to sell me more of your fertilizer?” Having third-party unbiased advice is always a good thing.”

The MnSCU study found that eight of 10 Minnesota farmers are not participating in education programs because of time constraints or schedule

conflicts. Nearly a third of farmers simply are unaware of the availability of college or university programs.

“There are 3,000 to 4,000 farmers enrolled in MnSCU Farm Management programs, which is a minuscule amount in the big picture. MnSCU should beef up their marketing and let farmers know what they offer.”

Farmers responding to the study said they prefer hands-on training, demonstrations and one-on-one training. While 72 percent of them use the Internet, they prefer printed materials over online information.

Smaller farmers — with less than $100,000 in annual sales — are most interested in learning more about tax and estate planning strategies to preserve their assets.

Larger farmers also become interested in learning new marketing strategies and better understanding of commodity markets.

“Across the board, tax and estate planning stands out as a need. And with the commodity markets having so much fluctuation, they want to learn more about the markets,” Finstad said.

He said that besides more aggressive marketing and a review of what MnSCU and Extension are offering, the study recommends having colleges work with the private-sector ag suppliers to create new programs that are objective and state of the art.

The complete study is available at http://bit.ly/LYxRi3.

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Advancing Business for a Stronger Community

Celebrating Minnesota Manufacturers Week October 22 – 28

Average Weekly Wage

Payroll

Employment

Each year Minnesota Manufacturers Week is held to Mankato, we are able to absorb industry-specific highs and recognizing the economic importance of this sector. As the lows, resulting in a relatively more stable economy,” says statistics below demonstrate, manufacturing is an important Greater Mankato Growth President & CEO Jonathan Zierdt. driver of the regional and state economy.

This diversity also benefits businesses on the supply side, In the Mankato-North Mankato MSA (including Blue with many resources readily available right here in the Greater Earth and Nicollet counties), 15% of all jobs are in Mankato region. manufacturing. And in addition to being an economic force Given all these advantages, Greater Mankato is well in its own right on its own, manufacturing feeds other positioned to take advantage of the many opportunities a industries, with each manufacturing job supporting another strong manufacturing environment affords.

1.9 jobs elsewhere in the economy through supplier purchases and consumer spending, which make Mankato-North Mankato South Central Region Minnesota MSA up an additional 28% of all jobs. This Includes: Blue Earth, Brown, Faribault, Le Sueur, Martin, means that 43% of all the jobs in the Includes: Blue Earth & Nicollet Nicollet, Sibley, Waseca & counties Mankato-North Mankato MSA are Watonwan counties either in manufacturing or supported Jobs all Industries 101,051 2,604,121 by manufacturing.

7,457 19,082 300,892 Jobs In Manufacturing (15% of all jobs) (19% of all jobs) (12% of all jobs) The Greater Mankato area’s 571,695 Additional Jobs Supported By* 14,168 36,256 manufacturing might is also powered (22% of all jobs) Manufacturing (28% of all jobs) (36% of all jobs) Jobs In or Supported By* 21,625 55,338 by industry diversification. Key 872,587 (34% of all jobs) Manufacturing (43% of all jobs) (55% of all jobs) manufacturing sectors include Payroll total for all Industries $1.78 billion $3.48 billion $124.61 billion Metal Manufacturing & Fabrication, $314 million $814 million $17.31 billion Payroll for Manufacturing Power Generation Manufacturing, (23% of all payroll) (14% of all payroll) (18% of all payroll) Payroll Increase over Electronic Manufacturing Services, 9% 7% 5% previous year (2010) Agriculture & Food Processing, Avg. Weekly Wage for all Industries $ 678 $ 661 $ 920 Renewable Energy and Printing.

Avg. Weekly Wage for Manufacturing $ 810 $ 820 $ 1,106 “Because of the wide variety of strong Avg. Weekly Wage Increase over manufacturing sectors in Greater 2% 3% 2% previous year (2010)

Made in Greater Mankato Greater Mankato Growth

You might be surprised to learn all that’s manufactured in Greater Mankato. Learn more about the following products and find out who produces them by visiting greatermankato.com/greater-mankato-made.

• Limestone used at Target Field and U.S. Embassies in Moscow and Abu Dhabi • Official kettle corn of the MN Vikings, Twins, Timberwolves and Lynx • More processed soybeans than any other town in North America • Millions of pounds of award winning cheeses • Only American man-made quartz surfaces • Cabling in 50% of all recreational vehicles on the road • Electronic devices and components utilized in space shuttles and mine resistant military vehicles • Fiber network for cell phone calls made across Minnesota • Number one brand of children’s books for struggling readers • 6,000+ painted truck armor parts for vehicles used by U.S. soldiers in Afghanistan • Printing, interactive and marketing solutions for 275 of the Fortune 500 companies • Thousands of elevators, including a model used to move whole tractors and trailers in sports complexes • 58 million gallons of ethanol from 19 million bushels of corn • Castings found on more than 75% of all semi-trucks on the road in North America • Well-known animal nutritional products • Variety of leading power generation systems and generator products utilized throughout the world

Chamber of Commerce and Economic Development

507.385.6640 • greatermankato.com

2011 in Pictures growth in

Greater Mankato

Manufacturers Open Doors As part of Minnesota Manufacturers Week, the Economic Growth Collaborative of South Central Minnesota is once again holding the Tour of Manufacturing. This year’s event will be Thursday, October 25 from Noon – 7 pm. The 2012 Tour of Manufacturing of South Central Minnesota will give students, job seekers and the general public an opportunity to learn about what is manufactured here and the many exciting career opportunities available now and in the future. The event, which is free to attend, is similar to a “Parade of Homes,” with community members able to stop by any participating manufacturer throughout the day to take a tour and learn about the business and industry.

This year’s participating manufacturers are: Cololpast Manufacturing Dotson Company Express Diagnostics Mark Thomas Company MRG Tool and Die Corporation Navitor Parker Hannifin Pepsi Cola Bottling of Mankato Inc. Sanborn MFG, division of MAT Industries, LLC South Central College V-TEK, Inc. Wells Concrete Windings Inc. Wis-Pak of Mankato Inc.

NEW BUSINESS – Expressway 238 Belgrade Avenue, North Mankato

NEW BUSINESS – Investors Financial Group, LLC 1203 Caledonia Street, Mankato

For more information, visit tourofmanufaturing.com.

RIBBON CUTTING/NEW COMMUNITY ASSET – Myers Field House Rock Climbing Wall Minnesota State University, Mankato

Community members learn about V-TEK, Inc. at last year’s Tour of Manufacturing

NEW LOCATION - BuyFun.com * Photos By Sport Pix 2080 Lookout Drive, North Mankato

MN Valley Business • march 2012 • 29

Greater Mankato Growth

The 2012 Tour of Manufacturing is sponsored by:

Member Activities Upcoming Member Events

5:00 - 7:00 p.m.

October 2 CliftonLarsonAllen November 6 Mankato Brewery December 4 U.S. Bank City Center

Greater Mankato Growth

2012 Business After Hours Sponsored by

August Business After Hours at Chankaska Range & Winery

7:30 - 9:00 a.m.

October 17 Paulsen Architects, Inc. November 14 Pathstone Living December 19 Rasmussen College

2012 Business Before Hours Sponsored by

August Business Before Hours at Country Inn & Suites Hotel & Conference Center by Carlson

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

30 • october 2012 • MN Valley Business

Cavalier Calls on the Newest Greater Mankato Growth members

Agristrand Mankato, LLC 221 Mohr Drive, Mankato agristrand.com

Ameristar AmeriStar Manufacturing 2600 Ninth Avenue, Mankato ameristarmfg.com

Greater Mankato Growth has a wide variety of opportunities to promote your business in 2013, and now is the time to sign up for the ones you want.

Members who sign up online by November 1 will have the best chance of getting the opportunities they choose. All online sign-ups will be collected through midnight, with a drawing held on November 2 for those marketing opportunities where demand exceeds supply. Confirmations of the opportunities each business has committed to will be emailed in early November, after which time all remaining marketing opportunities will be available on a first come, first served basis.

This year you can also sign up online for many of the marketing opportunities offered by GMG’s affiliates, the Greater Mankato Convention & Visitors Bureau and City Center Partnership. These opportunities are generally available on a first come, first served basis, subject to the approval of the affiliate organization.

For more information or to sign up, visit greatermankato. com/2013-marketing-opportunities.

Make a Connection!

One of the greatest benefits of being a Greater Mankato Growth member is the connections made with others in the business community, and “Business Connection” makes it possible for members to connect in a whole new way. At its core, it’s a social media community, but created just for GMG members with more flexibility than traditional social media platforms. Think of it as a virtual networking tool just for GMG members – one you can utilize 24 hours a day, 365 days a year.

All employees from GMG member businesses can…

3 Post information and updates on your business 3 Start discussions on topics important to business 3 Promote events at your business 3 Add photos and videos of your business 3 Connect directly with other members Media relations professionals form GMG member businesses can also…

Post business news releases and articles about your business via the “News Post” feature, which once approved appear on Business Connection, as well as GMG’s Website, Facebook page and Twitter feed.

Viking JR. Motel 216 West Martin Street, Saint Peter vikingjrmotel.com

The best way to learn about all the benefits of Business Connection is to try it – so sign up and login today at GMGBusinessConnection.com.

MN Valley Business • october 2012 • 31

Greater Mankato Growth

Coulter, Schmidt & Klein Private Wealth Advisors 3 Civic Center Plaza, Suite 200, Mankato cskpwa.com

Member Marketing Opportunities

Awards Season in Greater Mankato

Greater Mankato Business Awards & Hall of Fame “The Journey to Success”

Join us in honoring some of Greater Mankato’s most outstanding businesses and professionals at the 2012 Greater Mankato Business Awards & Hall of Fame presented by Charter Business on November 13 at the Verizon Wireless Center.

The Greater Mankato Business Awards & Hall of Fame is an event that we at Greater Mankato Growth, as well as our affiliates the Greater Mankato Convention & Visitors Bureau and City Center Partnership, look forward to annually.

Each year attendees at the event come away inspired by and proud of the businesses and professionals we have here in Greater Mankato. From jobs to philanthropic contributions, our businesses make a significant impact on our community.

And likewise, when the community is stronger, business thrives. Here in Greater Mankato we are fortunate to have so many community members and businesses that understand and appreciate this positive, symbiotic relationship between business success and community success.

Learn about this year’s recipients, which will be announced in mid-October, by visiting greatermankato.com/businessawards-hall-fame.

Greater Mankato Growth

Martin Luther King Pathfinder The Martin Luther King, Jr. Commemorative Board is seeking nominations for the annual Pathfinder, Young Pathfinder and Business Pathfinder Awards.

The Pathfinder Award was created in 1986 to recognize individuals or organizations that, in the spirit of Dr. King, are initiators or action takers in the struggle for equal treatment, human rights and non-violence.

The Young Pathfinder Award was added in 2002 to recognize the commitment and courage displayed by area young people to achieve fair and equal treatment for all, healthy communities and peaceful resolution to conflicts.

The Business Pathfinder Award was established in 2003 and is presented by Greater Mankato Growth to recognize businesses that strive for equal treatment, human rights and non-violence in the workplace.

The deadline for the 2013 Pathfinder Award nominations is November 30, 2012. Pathfinder Award recipients will be honored at the 29th Annual Martin Luther King, Jr. Community Celebration, which will be held on Monday, January 21, 2013. For more information and a nomination form, visit greatermankato.com/pathfinder-awards.

32 • october 2012 • MN Valley Business

Fall Series Announced

The South Central College Center for Business & Industry and Greater Mankato Growth have teamed up to offer a series of workshops on hot business topics over the lunch hour.

These short, timely professional training sessions are designed for business professionals who want to stay current, learn new skills and connect with other business professionals in the area.

The Fall series line-up includes: October 4 Business Marketing through Facebook Presenter: Shayne Narjes Check out how to use Facebook in practical ways to increase word-of-mouth marketing and increase branding with a reasonable time investment.

• Trends in social media marketing • Use of Facebook by businesses • Word-of-Mouth marketing via Facebook • Spending time that is worth money November 1 Demystifying Financial Statements Presenter: Doug Yentsch • The basic elements of the accounting equation • Financial statements, how they interrelate and the information each provides • Ratio analysis and why the results of such an analysis are important to both managers and investor/owners • Potential problems that are associated with financial statement analysis • The most important ingredient (factor) in financial statement analysis December 6 How to use Financial Statements Presenter: Doug Yentsch • How investors utilize financial statements.

• The complications that management should consider when constructing pro forma financial statements.

• Calculate (1) operating breakeven/operating leverage, (2) financial leverage, and (3) total leverage.

• How knowledge of leverage is used in the forecasting and why financial planning is critical to survival.

• Importance of constructing a cash budget and information in a cash budget.

Sessions are just $10 for GMG Engaged members or higher, $25 for GMG Basic members and $45 for non-members, with lunch provided compliments of Subway. For more information or to sign up visit greatermankato.com/lunch-learn.

Why Leave Greater Mankato when Fall is so Fun?

By Christine Nessler Marketing & Leisure Sales Director storytelling, singing, dancing, playing and learning.

You don’t need to be a marathoner to join the fun of the Mankato Marathon on October 20 and 21. There is a weekend full of activities including the Scheels and New Balance Sport & Health Expo, the Orthopaedic & Fracture Clinic Speaker Series and the Pasta Feed at Myers Field House at Minnesota State University, Mankato on Saturday. Remember - spectators needs carbs too. And let the races begin - the KidsK and the 5K also take place on campus on Saturday. On Sunday spectators and runners alike will enjoy the excitement of participating in the full marathon, marathon relay, ½ marathon and 10K races, whether running or cheering. All of the races end on Riverfront Drive by the Verizon Wireless Center. After the race, there will be food vendors, music and activities galore. Cheer on the runners anywhere along the route and then congratulate them at the post-race party.

When considering a fall trip this year think about staying in Greater Mankato where you will enjoy the scenic views of the leaves changing colors in our beautiful river valley and the exciting events we have to offer. For more information go to visitgreatermankato.com.

Greater Mankato Growth

Greater Mankato has so much to offer for visitors and residents during the fall months. Consider a stay-cation this year to enjoy our fall colors and our great fall events like the Morgan Creek Vineyard Grape Stomp, the River Ramble, History Fest and the Mankato Marathon.

Cambria Crush: The Annual Great Grape Stomp is held from 12 - 6 p.m. on October 6 at the Morgan Creek Vineyards in rural New Ulm. This Harvest Festival, with competitive grape stomping, offers dancing and festivities throughout the afternoon, with performances by traditional Morris Dancers and Rakstar Belly Dancers on the winery grounds. Winning Stompers receive a free case of wine. Best Stomping costume wins a bottle of Morgan Creek Vineyard’s seasonal dessert wine, “Black Ice” or “Sweet E.” Costumes are not required but sure make the stomping more fun. Stomper registration is full, but you can still head out to the winery and enjoy the fun.

On October 7, the Mankato River Ramble embraces the best of both bicycling worlds - off-road paved trails and quiet country roads. Riders can choose a scenic route of 12, 26 or 42 miles. The 12-mile Minneopa Falls Loop will visit the beautiful state park. New this year is a 26-mile “Pie Run.” There is no running involved, but riders will bike over the river and through the woods to reach the Rapidan Dam Rest Stop and savor an array of award winning pies.

Riders seeking a greater challenge will love the 42-mile Lake Crystal Loop that visits the handsome hamlets of Rapidan, Lake Crystal and Judson.

History Fest is held the second weekend of each October at Jack McGowan’s farm outside of Mankato. This year the event is October 10 - 13. It’s a wonderful weekend of historical, hands-on education and recreation. From 17th century re-enactments and fire eaters to belly dancers and cannon shooting, the festival offers a taste of the past to kids and adults of all ages. The event and all the activities within it are designed to teach children about the past in an engaging manner. This is a day of

The Greater Mankato Convention & Visitors Bureau (CVB) is an affiliate of Greater Mankato Growth (GMG), operated as an LLC under GMC.The CVB is dedicated to the important work of attracting and servicing visitors to Greater Mankato.

MN Valley Business • october 2012 • 33

Has Minnesota lost its rural voice?

Regional Outlook

L

ast month a policy colleague of mine from the Twin Cities contacted me and asked a question that took me back on my heels. Specifically he asked if I could identify the creative voices and organizations developing new and innovative thinking to address the challenges and opportunities facing rural Minnesota. He also wanted to know who the influential voices were in the Minnesota Legislature on rural policy issues. And most importantly, if there were any organizations rising to the challenge of amplifying the “rural voice” as Minnesota becomes more and more urbanized.

While on the surface the question was rather simple and straightforward, my answer was anything but. Rather the question reminded me that it was no more than a decade ago when there were many organizations that tried to fill that rural policy and advocacy void.

In fact, rural advocates were all around us.

Not that many years ago Minnesota hosted an annual “Rural Summit,”where rural residents, advocates and legislators would gather together to share ideas, discuss best-practices and develop ways to move our whole state forward. And the Legislature didn’t need any lectures from outsiders to help then better understand rural issues, as there was always a strong group of farmerlegislators from southern and western Minnesota and a strong rural contingent from northern Minnesota to keep their urban colleagues informed.

Unfortunately today the number of rural districts continues to dwindle and the last farmer left the Legislature several years ago.

Today there are still rural organizations and advocates, but without question our collective rural voice is fragmented.

Concerns about rural health care are advocated by the Minnesota Rural Health Association; the concerns of rural towns and cities are addressed by the Coalition of Greater Minnesota Cities; and likewise, concerns of rural school districts are addressed by the Minnesota Rural Education Association.

Of course we still have farm organizations such as Farm Bureau and Farmers Union. However, farmer concerns are also fragmented by a variety of commodity groups such as

■ “Unfortunately today the number of rural legislative districts continues to dwindle and the last farmer left the Legislature several

By Jack M. Geller, years ago.”

Ph.D the Corn Growers, Soybean Growers and Cattlemen Associations. But if it is true that the whole can be greater than the sum of its parts, then where are the organizations that facilitate these rural voices and help unify and amplify their message? Equally important, are such organizations even needed?

Personally, I was always struck by the reality that with such a large and diverse rural land mass that Minnesota never had a state office or state agency that was dedicated to addressing rural development or rural policy issues. For example in Illinois, the Governor’s Rural Affairs Council which is headed

by Lt. Governor Sheila Simon recently completed a two-year effort to create a new rural development policy for the state. Working with regional universities the Governor’s Rural Affairs Council is now in the process of implementing the recommendations from their recently completed blueprint.

Similar examples can be found elsewhere. For many years the Texas Office of Community and Rural Affairs served as a focal point for the development of rural policy and the distribution of federal funds through the Community Development Block Grant Program. Today, the recently renamed Texas Department of Rural Affairs not only distributes the CDBG funds to rural communities, but also houses the State Office of Rural Health and the distribution of federal funds to help rural hospitals as well.

Similar to its neighboring state of Illinois, the Indiana Office of Community and Rural Affairs is also headed by their Lt. Governor (Becky Skillman). In fact, one would be hard-

34 • october 2012 • MN Valley Business

pressed to find a state agency with a wider array of programs and initiatives designed to address the needs of its rural communities and businesses. From its Young Entrepreneur Program to its Hometown Competitiveness Initiative, the Indiana Office of Community and Rural Affairs is a highly connected and networked organization dedicated to the betterment of its rural places. And just like its colleagues in Texas and Illinois, the Indiana Office hosts an annual Rural Summit designed to bring rural advocates, legislators and residents together to strengthen the fabric of rural Indiana.

So you can see how my answers to this colleague’s questions seemed a bit weak and tepid. The reality is that over the years the rural voice here in Minnesota has become simultaneously weakened and fragmented as various rural groups focused on specific sectors or industries with little coordination.

And while I am not suggesting that Minnesota should establish a new state agency, I do believe that a key missing piece in our advocacy for rural Minnesota is that unifying organization to help amplify the rural voice for all.

For those of us who sang in the college or high school choir, you know what I mean. Regardless how strong our individual voices may be, our collective voices are both amplified and strengthened when the choir director brings us all together. 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

Providing Excellent Service in: • Janitorial Services • Window Washing • Carpet Cleaning • Water, Fire & Smoke • Hard Floor Care Restoration

• Family Owned Since 1973 • Insured & Bonded

Business Feature Since the mid 1970s, Jim and Betty Koberoski have built up Edenvale Nursery south of Mankato.

They are eyeing retirement and selling the business.

Hard, fulfilling work It’s autumn — for Edenvale and the Koberoskis’ career

By Jean Lundquist Photos By John Cross

36 • october 2012 • MN Valley Business

J

atmosphere that has developed at Edenvale. Interspersed among the potted plants for sale are metal and resin sculptures of frogs, giraffes, bears, moose and goats. The nursery is also liberally sprinkled with benches, for anyone wanting to sit and take in the colorful flowers, the sounds of the birds and the frogs, and the colors of the flowers and textures of the foliage.

“We have people come out here to just relax and enjoy what we have here, without buying anything,” Betty says with a little bit of pride. “We love that!”

The screened in gazebo is also for that purpose. Edenvale does not sell gazebos, but the Koberoskis want people to get ideas on how they can create special gardens.

“One day, a woman called and asked if she could have a bridal shower here for a friend in our gazebo. I told her I’d be honored!” Betty recalls. “And I was. What a great compliment!”

Another time, a woman called and wanted to know if Betty would host her “pot party,” with a follow up in the gazebo. “I was relieved she and her friends wanted to pot up some plants,” Betty laughs. “Then they went into the gazebo and enjoyed a glass of wine.”

The gazebo is also where Betty goes to look for Jim some afternoons when she can’t find him. “This couch is a great place to take a nap,” Jim confesses.

Now both in their 70s, the Koberoskis admit they’d like to sell Edenvale and retire, but with a caveat. They’d both volunteer at the nursery, just to be there When asked if the rumor is true that Edenvale is for sale,

MN Valley Business • october 2012 • 37

Business Feature

im Koberoski shrugs his shoulders modestly and says, “I guess I’m just a farmer at heart,” when offered a compliment on the fruits of his labors at Edenvale Nursery When Jim and wife Betty returned to Minnesota after a 13 year stint in California, they purchased a five acre soybean field south of Mankato, with a vision. “It was a desert. There wasn’t a tree on the place over six feet tall,” Jim recalls, sitting inside a well furnished gazebo in the dappled shade of towering trees.Why didn’t the farmer in him just continue sowing soybeans in the field? “I don’t know anything about growing soybeans,” he says.

As a child, Jim and a brother were both afflicted with Rheumatic fever. Their father sold his 160 acre farm to pay the $12,000 medical bills. About that time, the Loomis Nursery, where the James Court Apartments now sit, came up for sale.

His dad bought it with a personal loan from Nellie Cray, and that’s where Jim learned the nursery business. “Jim always had this dream of his own nursery, so I said, “let’s do it, or forget about it.”’ Those were the words the Koberoskis needed to spring into action.

They purchased the ground in 1974, and by 1976, they were selling nursery stock and vegetables.

Betty taught elementary school the first few years, then went to substitute teaching after that to supplement their income while the nursery became established.

Betty credits Jim’s creativity and whimsy for the park like

Business Feature

The lush grounds include a variety of gazebos, water features and other touches that draw visitors.

Betty replies with more questions. “Do you want to buy it?

We’re in our 70s. Who wouldn’t want to retire?”

Pressed for more details, the Koberoskis say they haven’t advertised except by word of mouth. None of their five children is interested in taking over the business, they say.

“They don’t want to work this hard,” Betty says. “We’re out here every light hour during the spring and summer.”

Both agree the work is hard, but the lifestyle is healthy.

“We’re outside, and moving all day,” says Jim. With the drought this past summer, Edenvale employed three people eight hours a day, everyday, to water. “One lady came through and commented how lucky we were to be doing so well during the drought. I wanted to tell her it’s not luck, it’s called work,” says Betty.

Although the work changes a bit with the approaching autumn, the Koberoskis and their Edenvale staff continue their work. There’s pruning and deadheading and preparations for winter for anything that doesn’t sell. Much of their perennial stock goes into a cold storage building. Later, if there’s snow, they’ll fill in around the plants with snow to keep the temperature constant.

“We’ll keep some stuff a second year,” says Jim, but not likely a third year.”

“And we don’t have end of season sales,” says Betty, “because we don’t want to train people to wait for that. We have quality stock that is good, and guaranteed, all year.”

But as the days grow shorter, the leaves turn color, and the

38 • october 2012 • MN Valley Business

season for the nursery draws to a close, the Koberoskis wax a bit philosophical.

Betty gestures to the gardens surrounding her at Edenvale and says, “We can be very proud. We worked very hard for this.

It would be awful to sell it to someone and see it grow up into weeds.”

Both are deeply religious, and Jim goes to mass every morning. He says, “I didn’t create this, I’ve just been allowed to take care of it.”

Then, he says, “I’m the luckiest man alive. I’ve got a good wife, a good home, good kids, a good job, and I’m doing what I love. What else could I ask for?”

“Maybe a child interested in taking over the business,” Betty quips. MV

Profile

Always on call

Wes Gilbert says being available for calls at all times is key to building business.

Computer repair business requires commitment

By Marie Wood Photos By John Cross

W

es Gilbert never intended to make a career in the computer industry, but he’s been attracted to computers since he was young. The proof is in a snapshot of a 4-year-old Gilbert playing on an Apple computer, circa 1982 At age 28, Gilbert is the owner and lead technician of Mankato Computer Repair, which he opened with business partner Joe Rstom in February 2011. Focused on customer service and backed by technical know-how, Mankato Computer Repair aims to be a friendly and professional shop run by Gilbert.

“We treat every computer like it is our own. Every decision we make is based on service,” said Gilbert of Mankato. “I preach patience. You have to take time with every single person. That’s what people want, that’s what you give them.”

Gilbert is always on call and answers the phone line, which rings continuously and well into the evening hours. With strong competition among computer repair services, 24 hours

40 • october 2012 • MN Valley Business

is the standard turn-around time.

“As long as I’m conscious, I’ll answer it. I don’t like to miss calls,” said Gilbert. “If you’re not going to fix it, someone else will.”

There are three computer repair shops on Riverfront Drive — two on the same block in Old Town, where Mankato Computer Repair is located under the green-and-white sign.

Rstom and Gilbert have joined a number of local young entrepreneurs who are reviving Old Town.

Gilbert and technician Andy Deeren repair PCs while Rstom is the Mac technician. All help out at the service counter. They liken their profession to a trusted car mechanic.

They revive hard drives and remove viruses. They recover term papers, QuickBooks data, family photos and other files. Data privacy is part of the package.

“Trust is a big part of it. People come in on edge. They’re at a point of crisis. Their computer is down. We try to project a sense of calm. “You can stop stressing because it’s my problem

Wes Gilbert does most personal computer repairs in the shop but also does on-site work at business accounts.

■

Wes Gilbert

Owner, Mankato Computer Repair B.A. in philosophy and anthropology, MSU Graduated from Mankato West High School, 2002 now,”” Gilbert said.

Free diagnostics Mankato Computer Repair offers free diagnostics, free estimates and free pick-up and delivery in Mankato. Gilbert had a clear goal in mind with free diagnostics, which, apparently, no other shop in Mankato offers.

“If I can get people in the door, I can turn them into lifelong customers,” said Gilbert. “It makes it risk-free for customers.”

They offer free pickup and delivery for customers who want someone to disconnect and reconnect their computer.

Sometimes senior citizens opt for this service. Gilbert once held the hand of an elderly lady to teach her how to use the computer’s mouse.

Viruses, often designed for financial gain, are a major threat.

With a new crop of viruses every few months, technicians have to change their methods regularly.

“You really have to be a jack of all trades. When it comes to software, there are new problems every day.”

Customers also call on Mankato Computer Repair to set up new computers and networks, install Windows, upgrade hardware and transfer data. While Gilbert makes house calls, the majority of on-site work is done for business clients. Small businesses with three to 20 computers account for half of its client base. Contracts for business clients can be negotiated.

Mankato Computer Repair has set up networks, hooked up Wi-Fi, and serviced computers for Jim Downs, owner of Quest Marketing, Pagliai’s Pizza and NaKato Bar & Grill.

“Those guys are awesome. They’ve helped us out on many occasions,” Downs said. “I’d recommend them to anybody.

The service is fantastic.”

Mankato Computer Repair also sells Dell computers. Many customers prefer buying from a local store, where they can receive ongoing service, Gilbert said.

Booting up Gilbert was the regional manager of Geeks2u in Mankato, where he worked for five years. Deeren, a technician at Geeks2u, was the “guru” who taught Gilbert the art of computer repair. Rstom also worked there.

Geeks2u was founded by Pete Meixl, who sold the business at the end of 2011.

The owner was hands off, so I ran the place from top to

bottom. So not only was I hands-on fixing computers, but I learned how to run a computer business,” Gilbert said.

He and Rstom had known each other since they were kids.

Rstom had started Key City Creative, his graphic and Web design business, in a building he bought in Mankato’s Old Town. Gilbert approached Rstom about opening their own computer repair shop there. Now Rstom’s building houses two of his growing businesses.

Rstom designed the logo and chose the color green because it’s calm, welcoming and the color of circuit boards. He also developed the website and continues to handle marketing and advertising.

“I thought it was brilliant with me bringing my skills and Wes focusing on customer service,” Rstom said. “Wes has the ability to provide top-notch customer service that’s relatable and personable.”

As part if his initial investment, Rstom offered free rent to Mankato Computer Repair for one year. They hired a contractor to renovate the building. The city awarded a matching grant to reface the storefront. Rstom, Gilbert and Deeren pieced together the computers and equipment they needed from their closets.

“We got off the ground without a huge amount of overhead,” Gilbert said.

Photographer Daniel Dinsmore invested early on, but Rstom’s dad, Mike Rstom, owner/partner in Mankato Ford, has bought out Dinsmore and is also a partner in Mankato Computer Repair. The transition was amicable.

The biggest expense was a van wrapped in the Mankato Computer Repair green and white logo. Because vehicle wraps are moving billboards, Gilbert sold his car and drives the van everywhere. Gilbert also handles administration, bookkeeping and payroll.

“We’re going to make it. I’m not sure we’re going to get rich,” Gilbert said. “I’m confident that no one can match the service that Andy and Joe and I offer.” MV

MN Valley Business • october 2012 • 41

Profile

Former regional manager, Geeks2u

All in the Family Family members (from left) Ashley Kroubetz, Jeff Michel and Kimberly and Paul Kroubetz

Creating memories Kroubetz family builds RV business

By Marie Wood Photos By Pat Christman

K

imberly and Paul Kroubetz opened Kroubetz Lakeside Campers & Motors in 1999, shortly after they married. Paul was running a Ford dealership and invited Kimberly to sell cars. Instead, Kimberly, a real estate agent at the time, suggested selling campers.

“Our whole family grew up camping,” said Kimberly, 44.

In 13 years, Kimberly has built a successful RV dealership with her husband and daughter in Lake Crystal. Kimberly recalled placing one of her first orders for 10 Gulf Stream campers. Now Kimberly orders about 80 to 100 units every October and generally has about 150 to 200 RVs on the lot.

“I say Minnesota is the land of 10,000 lakes and 20,000 campgrounds,” Kimberly said.

For more than 35 years, Paul has operated Kroubetz Auto Body in Lake Crystal. He also has a storage facility and ownership in two strip malls.

42 • september 2012 • MN Valley Business

Paul continues to sell used vehicles and classic cars.

Her daughter, 24-year-old Ashley Kroubetz, worked part time and summers in high school and college. Ashley graduated from the University of St. Thomas and declined a corporate job to take on sales and marketing in the family business.

Kimberly’s brother, Jeff Michel, who was crucial in launching the business, is returning this month as general manager of parts, service and warranty.

Kimberly is also grateful for her full-time employees — about 12 in all.

As an exclusive Forest River dealer, Kroubetz carries about 12 lines from the Indiana-based manufacturer owned by Warren Buffet and Berkshire Hathaway.

“It’s a good feeling to be with a large manufacturer that’s self sustaining. They have been so good about their warranties. We also sell pre-owned and trade-ins,” Kimberly said.

Kroubetz generally has about 150 to 200 RVs on the lot at any time.

She also participates in a nationwide group of 20 RV dealers from non-competitive areas. Dealers meet quarterly to open their books and share what they’ve learned.

The only downside to this successful family business is that Kimberly, Paul and Ashley cannot camp as much as they’d like.

They occasionally load up the horses in their combination horse trailer/camper and take short trips to the Black Hills.

MVB: How do you and Paul complement each other?

Kimberly: Paul has a very strong auto background. Paul is also an entrepreneur with acquiring land, zoning, developing and working with contractors. He’s very good at that. My thing is I love the people part, marketing, working with other dealers to grow the industry and our business as well MVB: Do you separate home from work? If so, how?

Kimberly: We really don’t see each other during the day. We do such different things here. We may see each other one to two hours a whole day in passing.

Paul: I pick up the slack of whatever needs to be done.

Kimberly really runs the camping business.

Kimberly: Our customers think it’s neat because camping is kind of a family thing. When these relationships are so important, you need to find that balance and have open communication at work, at home. It affects people who work for you and adds a different dynamic. In some ways I’m harder on Ashley than other employees. I don’t want to be accused of favoritism. I hope she’s selling campers to my customers” kids and grand kids. That’s a neat thought.

MVB: What is your business philosophy?

Kimberly: It’s a combination of wanting to continue to grow to maintain competitiveness, make a profit, retain your ethics and have customers and employees happy. There’s a fine line when growing because you don’t want to lose that hometown family feeling for your customers.

Paul: When people come in, we greet them right away. They may have bought two to three campers from us. They often bring their family too to come in and buy.

MVB: What is your approach to customer service?

Kimberly: Without customers, you don’t have a business. I take it very seriously and we all do. If our customers are sitting around a campfire at a campground talking, our customers know we care.

MVB: What is the most rewarding aspect of your business?

Kimberly: We started this from nothing. It’s rewarding to see it grow and customers come back and refer us to others.

When customers come in and say, “We were at a campground and someone told us they were pleased with your customer service,”” that’s the best feeling I get.

I was super excited when Ashley decided to come on. That’s a great feeling. Without Paul, I would never have been able to start this. To have your husband have faith not long after your marriage — to bet on the pass line — and trust that I could grow it is cool. When I talk about Ashley, Paul and family, I get teary-eyed. See how easily I separate work from family.

MVB: Why did you, Ashley, decide to join the family business?

Ashley: I think in the back of my head, I thought I had to do something on my own — work in the big city or a corporation. I had a job offer, but then I had a moment. I knew this is where I wanted to be in the long run.

MVB: What is the most important lesson you learned from your mom?

Ashley: If there’s something you want to do in life, no matter how far out, how impossible, how crazy it seems — it’s possible if you go after it. She doesn’t let people tell her she can’t do something. No goal is too big.

MVB: What do you like best about working in the RV industry?

Ashley: It’s so unlike other industries. We know customers by their first names, they stop to visit, they bring their dogs. It’s so unique. Your customers feel like friends.

Paul: It’s a fun business. People come here to buy something they’re going to have fun in.

Ashley: When you buy a camper, you get to know every person that works here. Everyone has the same attitude. We’re excited for people when they come in. It’s a cool thing. MV

The interior amenities on RVs grow more luxurious all the time.

All in the Family

Ashley: We’re the same people we were when we were selling as we are after the sale when you come in for service.

Our participation in the Route 66 RV Network shows that.

We are a dealership that treats people well.

Kimberly: Those dealers in that network will take care of our customers as if it was us. We’ve had it come into play where it’s been crucial to have that connection.

(Route 66 is a national network of independent RV dealers who offer customer care and service to travelers in an RV bought from a Route 66 dealer. Dealers are nominated by other dealers.)

Business Memos/Company News

Farrish Johnson Law Office announces merger Farrish Johnson Law Office of Mankato and Murphy & Young of Madelia merged the two firms on Oct. 1.

The combined firm will practice under the Farrish Johnson Law Office name.

Farrish Johnson will retain office locations in Mankato and Madelia.

“The best of both firms will be brought out in this merger,” said Scott Kelly of Farrish Johnson. “The combined practice will be able to provide even more exceptional, knowledgeable legal services and additional resources for Mankato, Madelia, and the surrounding areas.”

Established in 1893, Farrish Johnson is known as one of the leading civil litigation and business law firms in the state.

Murphy & Young specializes in a variety of legal cases including estate planning, wills, real estate and more.

■■■ Tony Workman honored Tony Workman has earned membership in his broker/dealer’s top producers “Captain’s Club.” Harbour Investments is an independent securities broker/dealer located in Madison, Wis. This honor is awarded to the top representatives of the firm and Workman has earned the award for 11 Tony Workman consecutive years.

He is a Certified Financial Planner and owner of Workman Retirement Planning in Mankato.

■■■ Schwickert’s earns Perfection Award Schwickert’s Tecta America was the recipient of Carlisle SynTec Systems’ 2012 Perfection Award. Carlisle SynTec Systems is a leading manufacturer of single-ply roofing materials. The Perfection Award is a distinction that recognizes only the top five percent of Carlisle’’s contractors annually.

Schwickert’s has been in business since 1906 and is a leading commercial and residential roofing and mechanical contractor based in Mankato with branches in Rochester and New Hope.

■■■ Peterson, Davis named Super Lawyers Douglas R. Peterson and Wade S. Davis, shareholders in Leonard, Street and Deinard’s Mankato office, have been named 2012 Super Lawyers. Fewer than 5 percent of Minnesota lawyers achieve this professional designation each year.

In addition, Peterson, who also heads the firm’s Mankato office, was named among Doug Peterson the elite list of Top 100 lawyers in Minnesota, chosen from the more than 22,000 attorneys currently practicing in the state.

Each year, Super Lawyers ranks lawyers nationwide who have attained a high-degree of peer recognition and professional achievement.

Peterson, a Mankato native and graduate of Yale University and Harvard Law School, Wade Davis is a litigator with particular experience in business litigation and white-collar crime.

Davis, an MSBA board-certified labor and employment law specialist, helps clients litigate a variety of business disputes.

44 • october 2012 • MN Valley Business

Bluth named Super Lawyer Joseph Bluth of Manahan and Bluth Law Office has been named by Minnesota Super Lawyers magazine as one of the top attorneys in Minnesota for 2012 in Family Law. Only 5 percent of the lawyers in the state are named by Super Lawyers.

Bluth has been on the list since 2003.

Super Lawyers can be found online at superlawyers.com ■■■ Snell Powersports adds Stihl franchise Snell Powersports & Equipment, a dealer of all-seasons lawn care equipment and power products, recently added Stihl, the number one selling brand of chain saws to its product line-up.

Snell now carries blowers, trimmers, brush cutters and multi-task tools.

Snell PSE is also a dealer for eXmark, Ariens/Gravely, Arctic Cat, Ski-Doo, Can-Am and Commander.

On the web: snellpse.com ■■■ Three Eagles honored Three Eagles Communication received the 2012 Special Olympics Minnesota Outstanding Media Coverage Award.

In the past four years Three Eagles Communication has provided more than 400 minutes of airtime and donated 300 public service announcements to Special Olympics Minnesota and the Area 9 teams, including coverage of the Polar Bear Plunge each year.

■■■ Eide Bailly announces promotions Eide Bailly has promoted Adam Benson, Braden Wesley, Devon Soule, Nathan Mittelstadt and Rachael Pelzer to senior associates.

Benson serves in the tax department and has more than three years public accounting experience providing tax services to a variety of industries. He has experience providing international tax compliance and consulting services.

He has a bachelor’s degree in accounting and finance from Minnesota State University.

Wesley has more than five years public accounting experience.

He has provided both tax services to individuals, partnerships and corporations and audit services to a variety of industries.

He has a bachelor’s degree in accounting from Minnesota State University.

Soule, a graduate of Minnesota State University with a degree in accounting and minor in business law, has been with Eide Bailly for just over three years and works in the financial institutions audit department.

Mittelstadt has served in the Mankato tax department since graduating from Minnesota State University with a bachelor’s degree in accounting in 2008. He primarily works on partnership, corporate and trust tax services.

Pelzer has served in the Mankato audit department since graduating from Minnesota State University with a bachelor’s degree in accounting and minor in business law in December of 2009. She primarily works on employee benefit plan, health care, and manufacturing audits, and compilation services.

To submit your company or employee news. e-mail to tkrohn@mankatofreepress.com Put “Business memo” in the subject line.

Call or e-mail Associate Editor Tim Krohn at tkrohn@mankatofreepress.com or 344-6383 for questions.

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