Mn valley business june2015 by Free Press Media

Ryan Schmitz of Aquatic Gardens & Landscape. Photo by John Cross

The Great Outdoors

Outdoor rooms are hot

Also in this issue • Springwood Gardens • Glowing Hearth & Home • Valley Veggies

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F E A T U R E S June 2015 • Volume 7, Issue 9

Outdoor kitchens, pond-less waterfalls, exotic fire features and natural looking concrete pavers and stones are popular in the growing outdoor living space trend.

Tim Shimek and his wife Renee own Glowing Hearth & Home, a business that grew from his dad’s fireplace manufacturing business, Heat-N-Glo.

Terri Anderson and her husband John have operated Valley Veggies on fifth generation family land between Mankato and Judson on Highway 68 since 1997.

Springwood Gardens, owned by Karol and Dick Emmercich, is a daylily paradise that sits atop a bluff overlooking the Minnesota River valley.

MN Valley Business • June 2015 • 5

■ June 2015 • VOLUME 7, ISSUE 9 PUBLISHER James P. Santori EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Heidi Sampson Nell Musolf Richard Siemers Dean L. Swanson PHOTOGRAPHERS Pat Christman John Cross COVER PHOTO John Cross PAGE DESIGNER Christina Sankey ADVERTISING Ginny Bergerson MANAGER ADVERTISING sales Jen Wanderscheid Theresa Haefner ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Denise Zernechel DIRECTOR For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6336, or e-mail mankatomag@mankatofreepress.com. MN Valley Business is published by The Free Press Media monthly at 418 South 2nd Street., Mankato MN 56001.

■ Local Business memos/ Company news................................7 ■ Business and Industry trends.........9 ■ Minnesota Business updates....... 10 ■ Business Commentary................. 12 ■ Construction, real estate trends.. 33 ■ Agriculture Outlook...................... 34 ■ Agribusiness trends..................... 35 ■ Job trends..................................... 36 ■ Retail trends................................. 37 ■ Greater Mankato Growth.............. 38 ■ Greater Mankato Growth Member Activities ....................... 40

6 • June 2015 • MN Valley Business

From the editor

By Joe Spear

$40 billion business is expanding State government has economic reach

ou don’t normally think of state government as a business or the Legislature as its board of directors. Scary thought, right? But as we sit in mid-May, we find ourselves waiting to see just what the business of state government is deciding it will expand this year. And it does always expand. The $40 billion biennial budget sometimes grows by 2 percent and sometimes 10 percent. This year it appears closer to 10 percent. It sometimes grows automatically – more people become eligible for programs based on their income or need – and it sometimes grows on purpose by legislators expanding programs or boosting raw dollar amounts for any given state “business.” The reach of that expanding business filters down to the economy in general and to a lot of smaller businesses. When the Legislature expands funding for schools -- another good bump coming this year -- every town and every city that has a school sees the gain. The Legislature and governor had agreed in mid-May to expand spending on higher education by $166 million. That goes to cities like Mankato that have higher education institutions. We get a double shot of that because we have two state-sponsored schools in Minnesota State University and South Central College. Minnesota’s health and human service “business” is one of the biggest state expenditures at nearly $13 billion every two years. Hospitals, home care facilities and nursing homes are funded with that money. Many small towns in the Mankato area as well as Mankato itself have lots of nursing homes and assisted living facilities. A GOP proposal this year had funding increasing to those nursing homes by about $150 million. The Mankato region also has a high concentration of state government employees who work for a number of state-funded businesses from MSU and SCC to the St. Peter Security Hospital and the regional Minnesota Department of Transportation office. State employees make up about 10 percent of the regional

work force. But the biggest government spending boost to the economy would come from a massive new road funding bill. For the first time in many years, Democrats and Republicans were planning on anywhere from $7 billion to $11 billion in new spending on fixing roads and bridges over the next 10 years. Those projects reach every county and city and small town in the state. It would bring road construction on a scale we haven’t seen in decades. It would be a headache for motorists but it sure would be a boon for the construction industry and its workers. A 10-year road construction plan would likely bolster regional employment in a long-term sustainable way. And construction wages tend to be on the higher end of the regional wage scale. But at the same time, there are always activities of state government that cost business money and have a negative impact on the economy. The Mankato area’s robust agriculture industry and farmers may indeed likely face more costs as Gov. Mark Dayton pushes environmental legislation that would require farmers to take some land out of production in order to line streams and ditches with buffer strips. While the proposed mandates seemed to offer some flexibility, the alternative methods of water protection were also likely to add some cost to farming operations. The expense side to the road construction bill would be a possible gas tax increase, which would also likely impact every business who uses vehicles or trucks to ship their goods or whose employees drive for their job. The upside to that issue so far is that gas prices remain 40 percent below where they were last year, so even if there is a gas tax imposed, business and consumers would still be paying less. A $2 billion state surplus will drive the growth of the government’s business this year. That’s something we haven’t seen in a while. MV Joe Spear is executive editor of Minnesota Valley Business. Contact him at jspear@mankatofreepress.com or 3446382. Follow him on Twitter @jfspear.

Local Business People/Company News

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Eide Bailly promotes Ellingson

Ben Ellingson has been named partner-in-charge of the Mankato office of Eide Bailly, a regional certified public accounting and business advisory firm. He assumes the role from Linda Koerselman, who retired from the firm in April. Ellingson has more than 15 years of public accounting experience serving closely held companies and non-profit organizations. In addition, he co-chairs Eide Bailly’s First Focus Committee, which is the firm’s initiative to nurture a firmwide culture where women are as likely to succeed as men. Ellingson is active in several professional organizations. ■■■

Javens honored by industry

The Minnesota Electrical Association honored Andrew Javens of Javens Electric in Mankato for his contribution to the industry by serving on the MEA Board of Directors. MEA provides education, legislative representation, and industry information to electrical contractors and their stakeholders in Minnesota and surrounding states. ■■■

Lidstrom in new location

Lidstrom Commercial Realtors has moved their offices to the seventh floor of Profinium Place, 100 Warren St., Suite 708 in Mankato. ■■■

Person Elected Director of Federated Insurance

Sarah Person of Mankato was elected to the board of directors of the Federated Insurance Companies. Person is the owner of Exclusively Diamonds in Mankato. Founded in 1904, Federated Insurance is a national insurance and risk management organization that serves the property, casualty, health, and life insurance needs of clients in select industries. ■■■

Leibfried joins Eide Bailly partnership

Brenda Leibfried from the Mankato office of Eide Bailly, a regional certified public accounting and business advisory firm, was accepted into the firm’s partnership. She joins 14 other new partners bringing the total number of partners to 230. Leibfried, a CPA, has 19 years of public accounting experience working primarily with financial institutions ranging in asset size from $10 million to more than $1 billion.

Greg Thoen honored

Gregory Thoen a private wealth advisor with Ameriprise Financial, has qualified for the company’s 2014 Circle of Success annual recognition program and will be honored for this achievement in 2015. To earn this achievement, Thoen established himself as one of the company’s top advisors by consistently demonstrating exceptional commitment to financial planning and Gregory Thoen superior client service. Thoen’s office is located at 1930 Premier Drive, Mankato. ■■■

Davis Comfort earns awards

Davis Comfort Systems has earned the 2014 Connected Home Solutions Award, which recognizes the Trane heating and air conditioning dealers with the highest sales of Trane connected controls and fully integrated Nexia home automation products and Schlage door locks. The company also earned the TCS Platinum Dealer Award, which recognizes Trane Heating and air conditioning dealers that deliver outstanding customer service based on consumer reviews submitted to Ingersoll Rand. ■■■

Condux adds James Curtis

Condux Tesmec announced the addition of James “Jimmy” Curtis as its new technical service manager. He will manage the development of training materials, as well as deliver onsite training and instruction to customers throughout the United States and Canada Curtis brings over 20 years of customer support in the development James “Jimmy” and administration of training and instructional materials. Curtis Condux Tesmec offers a full line of stringing equipment including pullers, tensioners and puller-tensioners, as well as productivity-enhancing conductor stringing tools and accessories. ■■■

Danberry, Standon honored

Laurie Danberry of Heintz Toyota received the 2014 Silver Level Sales Society Award for the seventh year from Toyota Motor Sales USA. This honor recognizes sales consultants that have sold over 190 new Toyotas and demonstrated outstanding customer satisfaction performance. Jacki Standon received the 2014 Comptroller’s Award for Excellence from Toyota. The award recognizes comptrollers who successfully prepare and transmit their

MN Valley Business • June 2015 • 7

dealership’s financial statement according to Toyota’s accounting standards. ■■■

Winkels earns arborist credential

Bridgett Winkels, and environmental scientist at ISG, earned the credential of Certified Arborist by the International Society of Arboriculture. In addition to successfully completing the exam, certified arborists follow a code of ethics and have met all requirements to be eligible for the exam, which includes three or more years of full-time, eligible, practical work experience in arboriculture and/or a degree in the field of arboriculture, horticulture, landscape architecture, or forestry from a regionally accredited educational institute.

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.

Read us online!

8 • June 2015 • MN Valley Business

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C.O. Brown honored

North Risk Partners, which includes C.O. Brown in Mankato, has been awarded Platinum Partner agency by United Fire Group. The award is given to agencies that meet high standards of quality set by United Fire Group. The areas of measurement include profitability, growth, retention and claim frequency.

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Business and Industry Trends

Agriculture

Crop prices stay low

Local corn prices in May continued to slide down continuing a several month trend. Corn was at $3.33 per bushel, down 20 cents from the previous month and down about $1 from May of 2014. Soybean prices have held a bit steadier through the start of this year, but are still considerably lower than last year. Soybeans were at $9.36 per bushel in May, up 23 cents from the month before but below the $14.70 set in May of last year.

Hog prices rebounding

After a few months of prices lower than have been seen in more than a year and a half, hog prices perked up some in May. A 185 pound carcass was selling locally for $80.06 in May, up from about $59 the month before but still far below the $110 it was at a year earlier.

Economy

GDP to decline in ’16

The Bureau of Economic Analysis reported that real gross domestic product (GDP) grew at an annualized rate of 2.2 percent in the fourth quarter of 2014. With the latest estimate for the fourth quarter, private inventory investment increased less than previously estimated, while consumption increased more than previously estimated. Forecast real GDP growth reaches 2.7 percent in 2015 and declines to 2.3 percent in 2016. Growth is expected to be higher in 2015 because of greater business investment spending and increases in consumer purchases. However, a stronger dollar and lower demand from slower-growing economies are expected to reduce export growth and raise import growth. Real disposable income grows by 3.1 percent in 2015 and by 2.2 percent in 2016. Total industrial production grows at 2.1 percent in 2015 and 2.8 percent in 2016. Projected growth in nonfarm employment averages 2.2 percent in 2015 and 1.5 percent in 2016.

Investment growth higher

Forecast private real fixed investment growth averages 5.2% and 6.7% in 2015 and 2016, respectively, led by equipment in 2015 and by residential investment in 2016. Real consumption expenditures grow faster than real GDP in 2015 and 2016, at 3.2 percent and 2.6 percent, respectively. Durable goods expenditures drive consumption spending in both years. Export growth is 2.2 percent and 3.2 percent over the same two years, while import growth is 4.4 percent in 2015 and 5.8 percent in 2016. Total government expenditures rise 0.9 percent in 2015 and 0.5 percent in 2016.

Energy

Coal inventories up

Coal Electric power sector coal inventories increased by 3 percent in January 2015 from the previous month, leaving them 16 percent higher than in January 2014. Coal inventories have now increased for five consecutive months. The monthto-month increase was unusual, as inventories generally decrease during the winter months as coal-fired generation increases to meet winter heating demand. Warmer-thannormal January temperatures in areas where coal-fired generation is important, coupled with lower natural gas prices, contributed to the inventory growth. Coal consumption in the electric power sector will decrease by 6 percent in 2015, despite an increase in overall electricity generation. The retirements of coal power plants in response to the implementation of the Mercury and Air Toxics Standards also affect demand in the power sector and contribute to the decline. The full effect of the coal plant retirements will be felt in 2016, but projected rising electricity demand and higher natural gas prices increase the use of the remaining coal-fired fleet, mitigating the of the retirements as projected coal consumption in the electric power sector increases by 2 percent.

Electric rates on the rise

Residential electricity prices increased during 2014, with growth ranging from 1.3 percent in the Pacific Coast states to 9.8 percent in New England. Retail electricity rates have risen for various reasons. Many electric utilities purchase their power from regional wholesale electricity markets, which experienced higher prices last year. Other reasons commonly cited for higher retail electricity prices are the increased investment in transmission and distribution infrastructure, rising requirements to generate electricity from renewable energy sources, and utility investment in demand-side efficiency.

Ethanol to keep slipping

After ethanol production in December 2014 topped 1 million barrels per day for the first time, it is estimated to have fallen to an average of 944,000 barrels in March 2015. Ethanol production averaged 935,000 barrels per day in 2014, and EIA expects it to average 944,000 in 2015 and 937,000 in 2016. Biodiesel production averaged an estimated 83,000 barrels per day in 2014 and is forecast to average 82,000 barrels in 2015 and 84,000 barrels in 2016.

MN Valley Business • June 2015 • 9

Minnesota Business Updates

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■ Best Buy gives in to Apple Pay After initially snubbing the Apple Pay service, Best Buy has accepted the burgeoning mobile payments system launched by Apple. Apple Pay users can now make purchases using the Best Buy iOS app, while in-store purchases at Best Buy outlets using NFC will be allowed later this year. Best Buy adopting Apple Pay is a big deal since the retailer is also part of Merchant Customer Exchange (MCX), “a merchant’s association that backs its own mobile payments platform called CurrentC,” according to PC World. “MCX merchants make their own decisions about what solutions they want to bring to their customers...When merchants choose to work with MCX, they choose to do so exclusively.” Other retail giants like Wal-Mart, Rite Aid, CVS and Sears are members of MCX as well. Rite Aid and CVS stopped accepting Apple Pay transactions at their stores a week after the service was launched. Meanwhile, Best Buy executives believe customers these days have a variety of methods to pay by, and being in the retail sector, Best Buy should provide as many options to customers as it can to make its service the best and most convenient.

■ New Target hire to redo grocery

Target has hired former Safeway and PetSmart executive Anne Dament to lead its grocery business makeover. The Minneapolis/St. Paul Business Journal reports that she started her career as a buyer for Eden Prairiebased Supervalu and held several merchandising and management positions at Pleasanton, Calif.-based supermarket chain Safeway. She spent the past six years as an executive at Phoenix-based PetSmart Inc. Dament grew up in the Twin Cities and worked at the Kowalski’s store on Grand Avenue in St. Paul during high school and college. She graduated from the University of St. Thomas in 1989. Target is trying to liven up its grocery business over the next 12 to 18 months and said it will focus on six food groups, including healthier snacks; coffee and tea; premium sauces and oils; specialty candy; wine and craft beer; and yogurt and granola. It’s part of a larger effort to connect with millennials.

■ Minn. companies add robots Recently, Robert Grove of Cosmos Enterprises, a small southeastern Minnesota machine shop, invested nearly $250,000 in a robot that can handle many of the repetitive tasks in his shop. It was a response to an ongoing problem in finding enough qualified employees, according to the Rochester Post Bulletin. A growing number of manufacturers in Minnesota are turning to robots to help ease a labor shortage. Robots aren’t new in large manufacturing plants, but 10 • June 2015 • MN Valley Business

small companies across Minnesota also are embracing a new generation of robots to stay competitive. In Grove’s brightly lit shop, the robot sits in a cage to keep workers from walking into the rapidly moving arm. The robot’s job is to load metal blocks into computerized machine tools that shape the parts. It then removes the finished part -- all without ever eating lunch or taking a bathroom break. “For sure you gain 45 minutes a day of production,” Grove said. “That’s real money.” Grove said the robot doubled the output of two milling machines. It also allows his skilled workers to focus on using their skills, instead of simply loading parts into a machine all day. Alexandria Industries has more than a decade of experience with robots. The company, which makes aluminum parts for everything from medical equipment to military rifles, is a much bigger business, employing about 370 workers. “We have nine robots tending machines today,” engineer Todd Carlson said recently. “I’ve got two more robots on order right now and scheduled to order two more before the end of the year.”

■ Xcel: Limit solar garden size Xcel Energy Inc., alarmed that its Minnesota community solar ¬program has unleashed large-scale corporate solar development, said it will enforce size limits on projects — a controversial step that would cancel more than 80 percent of those proposed so far. The Star Tribune reports that even with a size limit, Xcel officials said Minnesota will boast one of the largest community solar programs in the nation. Such programs, which Xcel pioneered in Colorado, let customers subscribe to shared solar arrays built by energy developers in farm fields or on large commercial rooftops. Xcel’s size-limit directive, issued in a regulatory filing, jeopardizes plans by St. Paul-based Ecolab Inc., Macalester College in St. Paul and St. Olaf College in Northfield to offset all their electricity with subscriptions to multiple solar gardens. Such deals by large energy users represent “a very different product than the one that was intended by the Legislature,” said Aakash Chandarana of Xcel. Although Xcel supported the 2013 Minnesota law that authorized community solar gardens, the utility has complained that solar developers are proposing clusters of up to 40 adjacent solar gardens on single sites. Many projects, Xcel said, are being marketed only to large customers, and resemble the large “utility scale” solar projects that Xcel is developing separately at lower cost than solar gardens.

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■

Business Commentary

By Dean L. Swanson

Why some entrepreneurs have a tough time

’ve written about what makes successful entrepreneurs but someone asked me to discuss what pitfalls small business CEOs face that may make them “not so successful.” Entrepreneurs regularly confront a host of tough challenges such as landing their first sale, growing their customer base, hiring the right employees, managing cash flow and accessing funding, among many others. I am going to suggest that the biggest challenge entrepreneurs may face is either a self-limiting or selfinflated view of their capabilities. Fear, self-doubt, overconfidence, “in-group” thinking, misplaced commitment to a selected course of action, or entrepreneurial myopia can all lead an entrepreneur to sabotage his or her business. Gallup research revealed several potential blind spots that can hurt the success of entrepreneurs. I really liked the report done by Sangeeta Bharadwaj Badal, senior researcher, entrepreneurship at Gallup. I will share some of her key points that she identifies as “blind spots” and then provide some advice for each: Relentless focus on profitability: Making money is a business’ primary objective. But when profit orientation becomes an obsession, customer relationships can suffer. In a “profit first” culture, employees face immense pressure to maximize revenue with little consideration for the customer experience Advice: Don’t lose sight of the human element in business. Keep customer expectations in mind when making decisions. Overconfidence: Confidence grows businesses, but overconfidence can hurt them. Overconfidence leads entrepreneurs to underestimate the complexity of a situation and to overcommit resources when pursuing an opportunity without first assessing the competition. Advice: Avoid the “speed trap.” When the window of opportunity is narrow, pause and build what-if scenarios before taking action. Unfocused creativity: Intellectual curiosity spurs growth, but too many ideas can be counterproductive. A lack of focus might cause an entrepreneur to launch multiple initiatives at the same time, losing sight of the core business and confusing his or her teams. Advice: Select ideas that streamline your business and add value for your customers. Need for control: Go-it-alone entrepreneurs can single-handedly get things done in a startup environment. But as the venture grows, their need for control keeps these entrepreneurs from focusing on activities that bring the highest value to an expanding business. Advice: Hire and train talented people, and then transfer responsibilities to them.

12 • June 2015 • MN Valley Business

Ineffective delegation: Delegation is vital to growth. But setting up an effective delegation process is hard. Often, entrepreneurs hand off tasks to the least busy, and then make the mistake of micromanaging that person behaviors that can lead to costly mistakes. Advice: When delegating, identify the right person for the task, give clear instructions and be patient. Building your team members’ capacity takes time and effort. Misplaced commitment to a selected course of action: Entrepreneurs with high tenacity and perseverance tend to stick with a failing strategy, even when the results consistently fall below expectations. Advice: Set specific milestones to gauge progress on your project. Be prepared to change course if needed. Entrepreneurial myopia: It’s not uncommon for entrepreneurs to fall in love with their idea or product. Their closeness to it and their intense desire to see it succeed blinds them to its flaws. Advice: Be objective about what you offer to the market. Surround yourself with trusted advisers who can help you assess the situation objectively. Ineffective networks: Robust and diversified personal networks facilitate venture growth. But many entrepreneurs fail to build an effective network or are unable to adapt it to accommodate their venture’s evolving resource needs. Advice: Figure out strategies to build your social quotient. Don’t forget to refresh and reshape your networks as your needs change. Confirmation bias: Successful entrepreneurs have a highly positive self-image, which leads them to favor information confirming their beliefs and opinions, while discounting information that contradicts their viewpoints. This bias affects their decisionmaking. Advice: Interact with people with opposite viewpoints. Allow them to counter your ideas and concepts. This will help you perceive opportunities more realistically. Badal summarizes her report, “Your behaviors may or may not be easy to change, but they tell you where to begin. Recognize and understand your most basic qualities. Once you understand your talents, biases and preferences, create a road map to systematically and consistently nurture your strengths and manage your areas of weakness.” Nurturing positive behaviors and finding strategies to manage behaviors that can negatively affect your business will yield extraordinary results. This approach will accelerate your personal development and positively influence your venture’s sustainability and growth. MV Dean L. Swanson,owner of Assurance Solutions in Rochester, is a mentor with the Southeast Minnesota SCORE www.seminnesota.score.org.

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Ryan Schmitz, of Aquatic Gardens & Landscaping, has done a variety of outdoor living spaces such as this one in Mankato.

Outdoor living Homeowners bring the indoors outside

By Tim Krohn | Photos by Pat Christman and John Cross Ryan Schmitz has built a lot of the increasingly popular outdoor kitchens, but he knew the latest trend had really hit its stride recently when he installed a certain appliance for the first time for a customer. “We designed an outdoor kitchen with meat lockers built into it. He had the Big Green Egg and everything and he was into dry-aging meat,” Schmitz said of the project. At Degrood’s Home Store, manager Rich Froman said they too are seeing a lot more interest from customers in

outdoor living and relaxation. “It seems like in the ’90s the big rage was indoor theaters and wet bars and now it’s all moving outdoors. Of course the drawback here is we only get to use it five months out of the year,” Froman said. Being in the outdoors has always been one of the biggest joys in Lynn Demuth’s life, and her greenhouse business near Vernon Center helps others beautify and enjoy their yards. “Growing up I much preferred the greenhouses, the

Cover Story

14 • June 2015 • MN Valley Business

Comfy patios with fire features are popular. barns or the fields rather than being in the house,” she said. Those early small greenhouses, started by her parents, turned in to a sizable business that Demuth operates in the spring and early summer. Spring is a bustling time for all the businesses that cater to area residents who want to improve their yards, head to a park or lake or just get out of the house after the long winter. Bringing the indoors outside Since high school, Schmitz knew he wanted to be a landscape architect. “It was a combination of being a very outdoorsy person and growing up on a hobby farm and all through high school I was big in art. So I took the two of them and knew that landscape architecture was what I wanted to do.” Schmitz, a Good Thunder native who attended Loyola, got his landscape design degree from South Dakota State University in Brookings. At first his goals were a bit dreamy – “I wanted to design golf courses” – but he realized there wasn’t going to be a huge amount of demand for it. When he graduated in 1998, he opened Aquatic Gardens & Landscaping. The name he chose was for two practical reasons. “When I started, the focus was on water features because it was really hot at the time, but it’s not the top priority for people anymore. And ‘A’ gets you at the top in the phone book.” While the name remains, about 75 percent of his business now is designing and building patios and outdoor rooms. “We do a lot of fireplaces and kitchens,” Schmitz said. While people love the look of stone, be it for outdoor

kitchen islands, fireplaces, patios or walkways, Schmitz said they rely on natural stones less and less. “We use some natural flagstones and things, but they’ve come so far with the patterns and textures on concrete pavers that they fool you into thinking they are natural

MN Valley Business • June 2015 • 15

Rich Froman, of Degrood’s, said the folding Adirondack chairs and Big Green Egg are popular. stone.” More people are also requesting permeable pavers when building a patio or driveway. The concrete pavers themselves aren’t permeable but they are spaced farther apart with crushed granite filling in the gaps to let water drain down rather than run off. The base under the pavers is also deeper and filled with larger crushed rock to allow water to filter down quickly. “They’re mandated in some municipal applications now. Around Lake Washington, any hard surface that’s installed has to be permeable so it doesn’t wash into the lake.” Decks, too, are rarely made of natural materials these days, said Schmitz, who’s a certified Trex composite deck installer. “It’s probably about four times the cost of doing just a treated wood deck, but it’s going to last a lifetime,” Schmitz said. “If people can afford it, they’ll definitely use (composite), unless you just need to spend less. I did that myself, I went with a cedar deck at my house and after several years, I redid it with Trex. I got tired of staining the wood.” While installing ponds is less a part of his business than when he started, he still installs many water features in people’s yards or outside businesses. “Most of them now are pond-less waterfalls. You get the waterfalls and recycle the water, but instead of a body of water at the bottom of the waterfalls, it’s an underground storage pit with rocks filling it,” he said. “There’s less maintenance and no algae to control. A lot of retirees like them because they have more time to enjoy it but they

16 • June 2015 • MN Valley Business

don’t have to do all the maintenance.” Many of the outdoor projects Schmitz and his crew of five employees do involve outdoor kitchens of some kind. “You put in fridges, stoves, sinks – anything that’s inside a kitchen you downsize it a little and make sure it’s weatherproofed.” Many of the kitchen projects are finished with stucco or cultured stone and granite custom counter tops or pouredconcrete countertops. Aquatic Gardens will take care of an entire project for customers, from designing a master plan (Schmitz and Luke Erickson are full-time landscape designers) to building the patios, decks, kitchens or water features and finishing it off with landscaping plants. He said customers often initially have bigger plans than their budgets allow. “We meet with them and they say they want this and this and this and I’ll say that will cost this much, then they say, OK, we’ll have to redo that a bit.” He tries to buy most of his landscape plants from local businesses but for some large orders he turns to wholesale purchases at Bachman’s. In the slower winter time, his employees try to keep busy with snow removal and Schmitz started another business – Creative Closets – to fill in time in the winter installing custom closets.

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The modern campfire The allure of sitting around a campfire is strong for Minnesotans, but that doesn’t mean they enjoy the sooty smoke. “Fire pits are huge,” said Froman of Degrood’s. “The gas-fired LP ones are more popular than wood. Midwesterners love sitting by a fire but no one likes smelling like smoke,” he said. “The gas ones are clean and give light and are a good heat source when it’s cooler out at night.” Schmitz said most of the outdoor projects he does include some flame. “Everyone wants some sort of fire feature.” Those aren’t always the traditional fire pits. “Last year we made a fire feature where we got a big boulder and drilled a core through it for a gas line and hollowed out the top. There’s tumbled glass in the bowl where the fire is,” Schmitz said. The biggest outdoor sellers at Degrood’s remain patio furniture and grills. “People get outside in the spring and see their furniture or grill isn’t doing so good.” Degrood’s sells higher-end grills and the Big Green Egg is the king of the heap, Froman said. “It almost has its own cult following. If I know someone who comes in has a Big Green Egg, I’ll grab them and turn them to the customer to tell them about it because I’ve never seen an unhappy customer with a Big Green Egg. They’re a lot of fun and easy to use and have a lifetime warranty.” Froman said people like them because they aren’t like traditional

charcoal grills. “It uses chunk charcoal and you don’t use lighter fluid and you can use the charcoal over and over. You just snuff it out when you’re done and relight it again.” Froman said he tested some of the charcoal during a cooking demonstration at the store and left it burn on low. “It ran for about 40 hours before it finally burned out.” Degrood’s has always had a large selection of kitchen appliances in stock and Froman said they now carry more outdoor kitchen appliances. “There’s a lot of interest in outdoor kitchens. The outdoor appliances are heavier and a bit more expensive because they are UL listed so they can be outside. The fridges have locks on them to keep out the raccoons and critters.” Froman and Schmitz said they think part of the growing interest in outdoor rooms was due to the recession. “I think instead of people selling their home and buying a new one, they’ve been adding more to their home,” Froman said. “You can only do so much inside, so they’ve been adding more outside, I think.” Froman said composite patio furniture that won’t rot and holds its color is popular with those improving their yards. “The polywood furniture is 100 percent recycled. Our brand is the Comfort Craft. It’s the only brand I’ve seen where the Adirondack chairs fold up. Those have really taken off – people like being able to fold them up and bring them to the lake or wherever,” Froman said.

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MN Valley Business • June 2015 • 17

Lynn Demuth, above, runs Wendlandt Greenhouse near Vernon Center. The hobby that grew Demuth said her Wendlandt Greenhouse business was “a hobby that got out of control.” Her parents, Tony and Ivalea Wendlandt, started with a small glass house on their farm when Lynn was a little girl 39 years ago. “Prior to that we had the plant porch in the house. They just like to grow things. They were giving plants away and then decided to start selling them.” The business and number of greenhouses grew over the years and Demuth moved the greenhouse business to her and her husband’s farm site in 2003. “Mom and Dad retired but they still come out every day.” “Primarily folks come out here and buy plants. We do some wholesale to Shellee’s Greenhouse in Madelia. We do a fundraiser for Holy Rosary Church each year and we plant 230 urns at the cemetery in Winnebago,” she said. She and her staff raise annual bedding plants, vegetables and flowers, and they sell a small number of fruit trees, shrubs and perennials. They grow most of their own plants, except for plants that have to be purchased because they are patented. “The Proven Winners or All-American Selections are branded and you have to pay a royalty (for their plants).” Demuth specializes in heirloom plants. “A lot of oldfashioned plants from your grandmother’s garden. We’re a niche market – you won’t see them in big-box stores.” She said people are often surprised at the variety of colors there are with heirloom flowers. “We’ve always had yellow petunias and lot of people have never seen them.

18 • June 2015 • MN Valley Business

We have 28 varieties of marigolds, a lot of salvias and impatiens.” She said more concern about GMO plants has more people interested in heirloom vegetables, particularly tomatoes. The greenhouse is open until June 20. Demuth donates a lot of plants, including those left over at the end of the season. “I donate to local parks and fairgrounds and the community garden and just some folks we know on lower incomes.” “This is very labor intensive. By the time we close, everyone is ready to be done for the year. “This business may not make us rich, but it is so good for the soul.” MV

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MN Valley Business • June 2015 • 19

Tim Shimek and his wife, Renee, operate Glowing Hearth & Home. His dad started Heat-N-Glo in the 1970s, which became the largest fireplace manufacturer in the world.

A warm glow Family developed a huge fireplace company

By Heidi Sampson | Photos by Pat Christman

n 1975, Ron Shimek set out to find a fireplace for the family’s patio but he and his wife couldn’t find one they liked. At that time, Ron worked as an engineer for a company out of the Twin Cities, and it was his engineering experience that led him to build a fireplace of his own in their garage. What he created was a wood-burning fireplace that hung from the roof of their patio by a chain. The fireplace had 360 degrees of glass and hung in the center of the patio. Over the years, Ron kept tinkering with the fireplace design, had it patented, took it to a few national shows,

and developed a remote control for the fireplace. Once the remote was in place, the fireplace idea took off causing Ron to create Heat-N-Glo, which has become the largest fireplace manufacture in the world. “By 1976, my Dad had started Heat-N-Glo as a fireplace manufacturing business,” said Tim Shimek, co-owner with Renee, his wife, of Glowing Hearth & Home. “Dad went from building one unit in his garage to creating a company that currently does around 350 million a year and is by far, the largest fireplace business in the US, as far as volume.” Once Heat-N-Glo was running, it quickly became a

Profile

20 • June 2015 • MN Valley Business

family affair with Ron’s brother Dan joining the business. Eventually, the company revolutionized the industry by inventing the world’s first Direct Vent Gas Fireplace, allowing fireplaces to be installed in virtually any room in a home. Ron’s sons have all held active positions within Heat-N-Glo, learning the various ins and outs of fireplace construction. In fact, Tim began working for his father at 9 years old. By 1998, Heat-N-Glo had developed into a pretty significant business. As a result, the business was sold to Hon Industries. Tim would attend college at Winona State, while continuing to work at Heat-N-Glo during the summer months. Once he graduated, he began working at Heat-NGlo full time. Over the years, Tim worked in manufacturing, with the assembly line, as a production manager, within the engineering department, sales, research and development, and finally, ended up selling fireplaces out in the northeastern part of the United States. “I simply got tired of traveling. At a meeting they talked about having more representation or coverage in Minnesota. I told them that was me. I wanted to get off the road and set up a couple of stores, which I wanted to run and own myself. Heat-NGlo supported my decision and in 2002, I left Heat-N-Glo’s corporate office and started Glowing Hearth & Home with our first store opening in Jordan. By 2006, Glowing Hearth & Home bought a Fireside and Hearth Home store, located on Riverfront Drive in Mankato. Eventually, Glowing Hearth & Home built a new building by Home Depot, where we are today. However, shortly after purchasing their Mankato location, they also bought a fireplace business in Burnsville, expanding once again by 2008. “We started from ground zero,” said Tim. “Today, we have 35 employees and we do around eight to nine million a year. We’ve been really fortunate that we’ve been able to grow the business every year since we started the company, which means we’ve grown by 20 to 25 percent every single year. That’s due to great customers and great employees. Our Mankato location has five to six employees, Burnsville has two to three employees, and the rest of our group resides in Jordan. This is where we do all of our scheduling, our warehouse is here, our installation crew, and the main showroom, is all in Jordan.” From Fireplaces to Linear Units Glowing Hearth & Home specializes in gas and wood burning fireplaces and stoves. Typically, they will assist a customer in anything they may want, such as wood-, gas-, and pellet-burning options. Glowing Hearth & Home takes pride in handling their products from start to finish, as they have installers who can do framing, sheet rocking, gas

lines, fireplace venting, as well as the stonework surrounding the fireplace itself. Glowing Hearth & Home sell mantels, wood surrounds, and granite. Also, their Mankato location sells outdoor products, such as outdoor patio furnishings, fire products and fire pits. They even have a limited gas grill line. However, for everybody in the hearth products industry, the single fastest growing category is outdoor fireplaces. “The other one that is really big is the linear unit,” said Tim, “which is a gas fireplace that is wider than they are tall. It’s very contemporary looking. They might be six feet wide and twenty inches high, with flames six feet wide. The best part is, they are available in many different sizes.” Every year, Glowing Hearth & Home attends the builder’s show in the twin cities. As a result, they work with 300 builders in the Twin Cities area alone, to install fireplaces during new construction. During the State Fair, Glowing Hearth & Home will conduct their fair specials, in which they advertise for retail customers who want to convert wood burning fireplaces to gas. Also, any homeowner can walk into their store and receive an itemized quote on a fireplace. Or, Glowing Hearth & Home will go out and help homeowners at their home location, free of charge. “Our goal is to make owning a fireplace as easy as possible for both the builder and homeowner,” said Tim. “There is a lot of little things to know, for instance how they can vent it, how efficient they are and what the options are for installing one. We want to make that process as easy as possible.” Glowing Hearth & Home’s busiest time of the year is September through mid-January. Typically, they not only have their builders calling to install product, but they also have a lot of homeowners who are starting to get cold and would like their yearly service work conducted. “We do a lot of service work and annual service work of our fireplaces,” said Tim. “Just like how we have someone come clean our furnace once a year, we do a lot of that same kind of service work with our fireplaces. That’s on top of regular installation, which makes the fall our busiest time of the year. We could take 500 calls a day. That’s not unusual. When we get to October and November, the phone just doesn’t stop. But what’s great about our entire group, is that we have a live person to answer all of our calls, and I have a great group of employees who make sure our customers are satisfied with the entire fireplace process from selection, to installation, to yearly checkups. MV

MN Valley Business • June 2015 • 21

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MN Valley Business • June 2015 • 23

Terri Anderson and her crew of volunteer helpers are busy in the early spring.

A big gardening habit Valley Veggies a labor of love By Nell Musolf Photos by Pat Christman

“I

hate to be indoors. I can’t stand it when I’m stuck inside. I have to be outside in the sunshine and fresh air and in the soil,” said Terri Anderson as she stood amidst the freshly planted plots that make up her family business, Valley Veggies. Anderson, along with her husband John, has been operating Valley Veggies, 52727,

Highway 68, Lake Crystal, since 1997. Anderson is the fifth generation of her family to farm the same land. Her great-great grandfather, Louis Seppman, built Seppman Mill in the early 1860s and the family has remained in the area since then. “I’ve lived here all my life,” Anderson said. “This is where I grew up and this is where we

Spotlight

24 • June 2015 • MN Valley Business

Daughter Amanda has joined the business, which offers plenty of hand work and physical labor. raised our four children.” While Anderson grew up in a farming family, it wasn’t until the 1990s that her own business came to be a reality. Terri and John Anderson were team truck drivers for several years. John still drives for Estes Express Lines. “He drives to support our 15 acre gardening habit,” Terri says. When Valley Veggies first opened, it was basically a trailer with a canopy at the end of the Anderson’s driveway. The family then sold sweet corn, tomatoes and melons. In 2001 the family began to sell plants to the public and since then Valley Veggies has steadily grown although there was a period when the business had to be put to one side while Anderson battled West Nile fever in 2003. The virus culminated in heart failure in 2006 and it was necessary to close Valley Veggies for close to three years. “While I was sick, my heart was down to functioning at about 16 to 17 percent. A normal heart functions at about 65 percent,” Anderson said. “I had a couple of doctors who told me that I’d never be able to work a full day again. My husband said, ‘don’t ever tell that woman ‘no, you can’t’ because she’ll prove you wrong.’ ” Which is exactly what Anderson did. After weaning herself off prescription medications, Anderson relied on herbs and vitamins to get herself back into shape and ready to return to her beloved gardens. “I guess I just wasn’t ready to give up. I can be pretty stubborn.” Valley Veggies reopened in 2009 although on a smaller scale. Now in its eighteenth season, the 15-acre gardening habit is one that is in full bloom from late spring through the fall season and it keeps Anderson and her helpers hopping all year long. “December is really the only month I have completely

off,” Anderson said. “After we close in the fall there’s a lot of clean up to do and then we start growing the plants very early in the new year. There’s always something that needs to be done.” Valley Veggies offers a variety of plants including cold crops such as onions, bok choy, chard and celery and warm crops including eggplant, ground cherries and several different kinds of peppers. Tomatoes, herbs and flowers are also available. In addition to things that go into the ground, Valley Veggies also sells certified Omega-3 eggs. Chemical free A point that Anderson is very proud of is the fact that Valley Veggies is run as a chemical-free farm. Instead of chemical pesticides, the Andersons depend on Diatomaceous earth, a natural soft sedimentary rock, to combat bugs and diseases on their plants. Diatomaceous earth is considered to be extremely environmentally friendly and is safe enough for humans to consume. A picture on Valley Veggies website (www.valleyveggiesmn. com) shows one of Anderson’’ grandsons virtually bathing in the stuff. “Farmers have been using Diatomaceous earth for a long time,” Anderson said. In addition to Diatomaceous earth, the Andersons employ another method of back to basics pest control. When a plant is looking less than vital, they surround it with pieces of wood at night. The wood is overturned in the morning and is usually loaded with bugs galore. The bugs are then taken care of in another chemical free manner: they are squashed. Using chemical free methods makes for hardier plants and that is Anderson’s goal. “We have very hardy plants,” Anderson said. “We’re known for how hardy our plants are and that’s because in MN Valley Business • June 2015 • 25

Anderson is the fourth generation to farm on the site along the Judson Bottom Road. Her great-great grandfather, Louis Seppmann, built the nearby Seppman Mill. addition to not using chemicals, our plants are exposed to the elements all of the time. That’s what makes a plant really hardy. Plus I touch them all the time, like when I walk past a flat. Just brushing your hand across the tops of plants makes them hardier too.” Family, volunteers pitch in While Anderson is the mainstay of Valley Veggies, she credits her mother, Karen Morse, with continual support and assistance as well as an endless stream of knowledge. Morse lives across the highway from Valley Veggies and is always available to answer questions or help out with planting. “Even to this day I still pick her brain,” Anderson noted. “I feel very proud of that fact that my mother is still so involved in all of this. She comes and pots plants or helps with holing and if I have a question for her, she has an answer.” Although all of the Anderson children helped out with the family business while they were growing up, Anderson says that she thinks that a lot of their help back in those days was more of just doing what they were told to do as opposed to taking an active interest in farming. Now, however, the Anderson’s oldest daughter, Amanda, has recently joined the family business and is helping with the technological aspects such as setting up a Facebook page and creating a webpage for the business. “I think it’s pretty amazing that we have three generations working together at the same time,” Anderson said. “It’s a good feeling.” In addition to family members keeping Valley Veggies running smoothly, a regular group of volunteers appear regularly to help out. Anderson said that there are about 30 volunteers who assist with planting, weeding and harvesting. In exchange the volunteers receive plants, fruits and vegetables. Anderson is quick to point out that the volunteers who help at Valley Veggies aren’t what she calls “random.” “The volunteers we have come on a regular basis. They

26 • June 2015 • MN Valley Business

don’t just wander in one day to help out. They are regularly scheduled. We have one family who volunteers for us because one of its members has celiac disease so they need to have a lot of vegetables in their diet. Some of our volunteers have been coming here and helping out for years,” Anderson says. One of those volunteers is Ken Roos. Roos has been a volunteer at Valley Veggies for 10 years. He works as the Wood Products manager for Shelter Products in New Ulm and gets his fresh air at Valley Veggies on the weekends. “I like it because I get to be out in the fresh air and sunshine,” Roos said. “I like interacting with the customers too. Plus after being out in the sun all day I don’t have to go anywhere and pay for a tan.” Schools often visit Valley Veggies on field trips and Anderson welcomes the opportunity to show students the ABC’s of plants. Anderson also welcomes the opportunity to visit garden clubs and other facilities to discuss chemical free gardening. Looking around her acreage, Anderson smiled. “It makes my heart beat to be out here,” she said. The soil makes me want to live. You know, we don’t take fancy vacations and we don’t live in a fancy house or drive an expensive vehicle. Both John and I like a simple life and that’s what we have right here.” MV

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MN Valley Business • June 2015 • 27

Springwood Gardens, located on old Highway 169 near Jordan, is open to the public only during tours.

Daylily paradise Breeder mixes fancy with hardiness By Richard Siemers Photos by Richard Siemers

pringwood Gardens is a daylily paradise that sits atop a bluff overlooking the Minnesota River valley. These are not public gardens that you can just drive into and look around, although there are tours by appointment. It is the home of Karol and Dick Emmerich. It is also where Karol Emmerich is carrying out her passion to bring beauty to our northern world, developing northern-hardy daylilies. But, you may think, we already have daylilies that grow profusely in our climate, and you’re right, especially if you like yellow and orange blooms. Emmerich, however, had bigger ideas. “I wanted to do something that no one has seen before,” she said. “I wanted to have really, really fancy things like you saw in the South, so I mixed the things I like from the North with the things from the South. I had a

lot of misses, but I was able to bring a couple things to the North, which is the very frilly edges and instant rebloom.” The frilly edges are technically called teeth. Rebloom means the plant grows a second stalk or scape. Emmerich’s are what she calls “instant rebloom,” meaning the second scape is emerging while the first one is blooming. One that reblooms later in the season is not as workable in Minnesota’s short growing season. “All of my hybrids do instant rebloom in other (warmer) parts of the country; probably 60 percent do it here in Minnesota,” she said. Along with a fancier bloom, Emmerich has bred a whole palette of colors into her daylilies, and most of her blooms are color combinations. She currently has 25,000 plants growing in the garden. She starts her new hybrids in the greenhouse and in the spring they are moved

Feature

28 • June 2015 • MN Valley Business

outdoors. “I have seven or eight kids who strip the greenhouse in a couple of days and plant as fast as we can,” she said. “I used to do 5,500 new seedlings a year, now I’m just doing 3,000. I’m getting tired; running out of room.” Record keeper Emmerich has been at this for about 20 years, and at her present location near Jordan for 15 years. She was in her mid-40s and at the pinnacle of her profession as a vice president and treasurer of the then Dayton-Hudson Corporation, when she retired because she “needed more color in my life instead of just black and white.” Instead of studying spreadsheets, she offered free coaching for executive directors of faith-based non-profits. She did part of the coaching at her Edina home, where her garden had grown to two acres. Many folks stopped by to see it, and many visitors would ask about the names of the flowers, not all of which seemed that inspired to her. She had friends who suggested she breed flowers, because then she could name then. Emmerich thought, “Oh, yeah, and name them after my girlfriends. I wanted to have serious names.” She decided to take up the challenge, although she had no background in horticulture. In fact, she didn’t like biology, which is why she majored in math and finance. “I have no interest at all in the science of this (breeding),” she said. “I apprenticed back in 1998-99 a few months a year with someone who knew what they were doing. It’s not that hard. It’s a lot of record keeping, and I’m a master record keeper.”

MN Valley Business • June 2015 • 29

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Her studies and career had given her training in keeping good records and in logic, and one reason buyers turn to Springwood hybrids is because the genetics can be precisely traced. “More than half of my plants go to other breeders, because of my record keeping,” she said. “I know what plants do and can do. I have one with good teeth called Gnashing of Teeth, so people who are looking to do teeth with good color, they know I’ve already run it through its paces. Or one looking for blue eyes will get my Desire of Nations. Ones who want really deep saturated purple will get one I call Sola Deo Gloria. One of my earliest ones was called Heartbeat of Heaven, and that would put ruffles on anything in the north, give it instant rebloom and good branching.” Blooming market The breeders who buy her plants are often hobbyists, backyard breeders who want to create something unique in their garden. But they are serious hobbyists, because her plants average $100 a piece. The buyers often recoup that expense by selling the extra plants they breed, often through an online auction sponsored by the American Hemerocallis Society, also called the American Daylily Society. She doesn’t sell directly from her website because she wants to make certain her buyers have a good experience. They can send an e-mail and tell her what they want, and she will work with them to determine the best selection.

30 • June 2015 • MN Valley Business

Emmerich feels she and her husband were blessed in that they both selected careers in finance, which at the time was as good a career as any, but over time became one of the highest paying. They were able to save their money and retire early. She seems to be having too much fun to retire from daylily breeding any time soon. “I push the envelope a lot,” she said. Mixing tender Southern genetics to get the fanciness and Minnesota genetics to get hardiness, there are more varieties yet to blossom. You may have noticed that many of the names Emmerich has given to her blooms have a biblical connotation. “Yes, the names are the reason I started hybridizing,” she said with a smile. “I wanted people to think about them when they looked at the name tags in their garden, and be inspired.” MV More of Karol Emmerich’s philosophy and goals, as well as history and photos of Springwood Gardens, are atwww. springwoodgardens.com.

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32 • June 2015 • MN Valley Business

blethenlaw.com Mankato, Minnesota

Construction/Real Estate Residential building permits Mankato

(in thousands)

- 2014 - 2015

11000

3000

$452

1000

2750 J

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

- 2014 - 2015 275

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

- 2014 - 2015 9

165

110

55 J

Source: Realtors Association of Southern Minnesota

Source: Cities of Mankato/North Mankato

Commercial building permits Mankato

(in thousands)

- 2014 - 2015

Commercial building permits North Mankato

- 2014 - 2015 (in thousands)

2000 1500 1000

$9,885 $1,236

$100 $201

500 J

Source: City of Mankato

Source: City of North Mankato

Interest Rates: 30-year fixed-rate mortgage

Foreclosures: 2014 Year End

— 2014 — 2015

5.5 5.0

4.3%

4.5 4.0 3.5 3.0

Housing starts: Mankato/North Mankato 40

174 98

220

Source: City of North Mankato

Existing home sales: Mankato region

80000 70000 60000 50000 40000 30000 20000 10000 0

$826

2000

$882

5500

- 2014 - 2015 (in thousands)

$3,699

8250

Residential building permits North Mankato

3.8% J

Source: Freddie Mac

County

2013

2014

Percent change

Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan

101 19 27 70 25 43 39 36 24

72 21 21 47 28 24 22 27 7

-29% +11% -22% -33% +12% -44% -44% -25% -71%

Source: Minnesota Foreclosure Partners Council C. Sankey

MN Valley Business • June 2015 • 33

■

Agricultural Outlook

By Kent Thiesse

Farmland values are trending lower

any agricultural experts and economists have been warning for the past couple of years that we could be headed for a significant correction in farm land values in the Midwest. Based on recent data, there appears to be evidence that a reduction in average land values may be occurring in some regions of the U.S., including the Upper Midwest. Much lower corn and soybean prices in 2014 and early 2015 have lowered farm incomes, which has put pressure on land values. Record farm income levels from 2010 to 2013 lead to major increases in land values in some areas during that that time frame. According to USDA data, there was a 14.5 percent increase in average farm land values from mid-year 2011 to mid-year 2012, followed by a 13 percent increase a year from mid-year 2012 to mid-year 2013, and an 8 percent increase from mid-year 2013 to mid-year 2014. However, more recent data would suggest that this trend is likely changing, at least in Iowa and Minnesota. Iowa State University also does a comprehensive land value survey each December, which is regarded as one of the best resources on trends in Midwest farm land sales. Following is a table showing the average value of Iowa farm land for the past 10 years (2005-2014), and the average percentage change in farm land values from one year to the next.

Iowa average farm land values YEAR 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

VALUE PER ACRE $ 2,914 $ 3,204 $ 3,908 $ 4,468 $ 4,371 $ 5,064 $ 6,708 $ 8,296 $ 8,716 $ 7,943

% CHANGE + 10.8 % + 10.0 % + 22.0 % + 14.3 % ( 2.2 % ) + 15.9 % + 32.5 % + 23.7 % + 5.1 % ( 8.9 % )

Iowa farm land values rose at an incredible pace from 2004 to 2013, with only one minor decline in 2009, before a more significant decline of almost 9 percent in 2014. This was the largest annual percentage drop in Iowa farm land values since 1986. The 2014 Iowa Farmland Value Survey showed the greatest drop in land values in northwest, north central, and northeast Iowa, with large majority of counties showing a 10-15 percent decline in land values during 2014. Trends in farm land values in southern Minnesota are fairly close to the trends shown in Iowa. Land values in portions of southeast and south central Minnesota, which had below normal crop yields in 2013 and 2014, have shown a greater decline than some other areas of the state. Some isolated land sales across southern Minnesota have

34 • June 2015 • MN Valley Business

still reported fairly high values per acre; however, the overall trend in the past 12-18 months has probably been a decline of 10-15 percent in land values from the highest reported average land prices in 2013. One of the best sources of farm real estate values in Minnesota is the U of M’s “Land Economics” web site www.landeconomics.umn.edu.

Farm land sales per acre selected counties in Minnesota

COUNTY Blue Earth Brown Faribault Le Sueur Martin Nicollet Waseca Watonwan

2012 $8,006 $7,533 $8,231 $6,249 $9,188 $8,438 $6,915 $7,674

2013 $8,426 $8,366 $8,269 $6,113 $8,408 $9,682 $7,811 $7,976

2014 $8,055 $8,109 $8,017 $6,623 $9,514 $8,485 $7,310 $7,792

Some key observations on the South Central Minnesota land sales data: • Average farm land values dropped in most counties from 2013 to 2014. • Average land values rose considerably in 2014 in Martin County, which is the number one hog producing county in MN, and 2014 was a record profit year in hog production. • Overall, most average land values in 2014 dropped back to near 2012 average land values. • The volume of land sales dropped off considerably in 2014, compared to 2012 and 2013. Corn and soybean prices have dropped even lower since the beginning of 2015, and profit margins in livestock production are much tighter than they were a year ago. The potential for reduced farm income in 2015 will likely continue to put downward pressure on farm real estate markets in southern Minnesota and northern Iowa. Many experts feel another decline of 10-15 percent in 2015 is highly likely. MV Kent Thiesse is farm management analyst and vice president, MinnStar Bank, Lake Crystal. 507- 381-7960; kent.thiesse@minnstarbank.com

Agriculture/Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2014 — 2015 8

— 2014 — 2015 20

$4.37

$14.70

12 8

$9.36

$3.33

Source: USDA

Iowa-Minnesota hog prices

Source: USDA

Milk prices

185 pound carcass, negotiated price, weighted average

— 2014 — 2015 140

$22.45

110

Minimum prices, class 1 milk Dollars per hundredweight

— 2014 — 2015 30

125

95 80 65 50

(dollars per bushel)

Soybean prices — southern Minnesota

$109.88

$80.06

Source: USDA

$17.30 J J

Source: USDA. Based on federal milk orders.

Corn and soybean prices are for rail delivery points in Southern Minnesota. Milk prices are for Upper Midwest points.

C. Sankey

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MN Valley Business • June 2015 • 35

Employment/Unemployment Initial unemployment claims

Minnesota initial unemployment claims

Nine-county Mankato region Major May Industry ‘14 ‘15 Construction Manufacturing Retail Services Total*

176 132 38 170 516

Percent change ‘14-’15

132 256 32 151 571

Major Industry

-25% +94% -16% -11% +10.7%

May

Construction Manufacturing Retail Services Total*

‘14

‘15

Percent change ‘14-’15

3,379 2,058 1,217 5,102 11,756

2,803 2,369 1,023 4,267 10,462

-17% +15% -16% -16.4% -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.

Local non-farm jobs

Minnesota Local non-farm jobs

- 2014 - 2015

Nine-county Mankato region 124,885 128,015

133000

(in thousands)

2000

111000

1000

100000

Local number of unemployed

- 2014 - 2015

Nine-county Mankato region 10000

Minnesota number of unemployed

- 2014 - 2015

133,805 135,243

150000

6000

100000

4000

50000

2000 0

200000

7,355 6,291

8000

2,844 2,879

3000

122000

- 2014 - 2015

Mankato/North Mankato Metropolitan statistical area

Unemployment rate Number of non-farm jobs Number of unemployed

2014

2015

4.1% 56,394 2,410

3.4% 58,074 2,030

Source: Minnesota Department of Employment and Economic Development

36 • June 2015 • MN Valley Business

Unemployment rates Counties, state, nation

(includes all of Blue Earth and Nicollet Counties) March

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

March 2014 4.2% 6.6% 7.0% 7.7% 5.8% 3.8% 6.4% 6.2% 6.2% 4.8% 4.5% 6.8%

March 2015 3.5% 5.9% 5.5% 6.7% 5.0% 3.1% 5.4% 5.3% 5.9% 4.0% 4.4% 5.6% C. Sankey

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2013 - 2014 1200

884

1000

798

800

$406

$387

400

100

200 J

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato $56,900 $45,279

60000

Source: Sales tax figures, City of Mankato

Mankato food and beverage tax

- 2013 - 2014

85000

50000

$55,837 $59,000

68000

40000

51000

30000

34000

20000

17000

10000 J

Source: City of Mankato

Gas prices-Mankato — 2014 — 2015

- 2013 - 2014

500

200

400

(In thousands)

300

600

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

Sales tax collections Mankato

Stocks of local interest

April 13

May 11

Percent change

Archer Daniels

$47.64

$51.60

+8.3%

Ameriprise

$125.42

Best Buy

$37.20

$36.97

-0.6%

Crown Cork & Seal

$54.62

$55.13

-10.9%

Eventis

$20.76

$20.21

-2.6%

Fastenal

$40.99

$42.47

+3.6%

General Growth

$28.89

$27.27

-5.6%

General Mills

$56.37

$56.07

-0.5%

Hutchinson Technology

$2.58

$2.03

-21%

Itron

$36.69

$35.60

-3%

Johnson Outdoors

$33.90

$27.74

-18.2%

$164.50

$159.90

-2.8%

Target

$82.71

$80.61

-2.5%

U.S. Bancorp

$43.42

$43.75

+0.7%

Wells Financial

$28.35

$28.75

+1.5%

Winland

$0.96

$1.20

+24%

Xcel

$34.31

$33.42

-2.6%

$3.50

$2.44

1 0

Gas prices-Minnesota — 2014 — 2015

$3.46

4 3 2 $2.49

1 0

Source: GasBuddy.com C. Sankey

MN Valley Business • June 2015 • 37

MAKING CONNECTIONS By: John Considine III, Business Development Resource Manager, Greater Mankato Growth

Greater Mankato Growth

As an integrated chamber of commerce and economic development organization, networking is a distinctive theme in all the work Greater Mankato Growth (GMG) does. By networking with national site selectors GMG can better showcase all the Greater Mankato area has to offer.

38 June 2015 • MN Valley Business 1 •• JANUARY 2013 • MN Valley Business

ur region is experiencing unprecedented economic growth which is both exciting and daunting. While we have attracted the attention of many businesses within and outside the state, we are relatively new to the table for many businesses considering expansion.

venues. A “Fam Tour” entails hosting a site selector in the community and giving them a first-hand account of what makes the community unique, what it is like doing business in the community, and, more often than not, emphasizing that the winter weather shouldn’t keep their clients away.

The Greater Mankato area is one of only three regions that formally became a Metropolitan Statistical Area (MSA) with the 2010 U.S. Census due to our population growth. We’re known as the MankatoNorth Mankato Metropolitan Statistical Area (MSA), made up of Blue Earth and Nicollet Counties. Site selectors scour the nation for areas in which to either locate new businesses or expand existing ones. So it is vitally important to educate a site selector about what is unique about our region that separates us from the pack. We’re still the new kid on the block and need to get our name out there and that falls to Greater Mankato Growth (GMG).

GMG has taken the approach of utilizing existing businesses to tell the story of our community’s success during Fam Tours. “Greater Mankato Growth is strengthening our community by bringing key people here to learn about our community. Johnson Outdoors is happy to share about the success we have achieved in the Greater Mankato area,” says Darrell Wolf, General Manager at Johnson Outdoors.

As an integrated chamber of commerce and economic development organization, GMG works with a vast number of activities, initiatives and opportunities. From membership and community events to providing the staffing and structure for the Regional Economic Development Alliance (REDA) and visiting with new and existing businesses about their needs or information requests, there is a distinctive theme throughout all the work GMG does. That theme is one of networking and connection, connecting businesses with one another, to resources and critical business and marketplace solutions.

In August of this year, GMG will be participating in the third “Fam Tour” (short for Familiarization Tour) with the Minnesota Marketing Partnership. The Partnership is a collaboration of cities and regions that work with the Minnesota Department of Employment and Economic Development (DEED) to develop a broadbased marketing initiative to promote Minnesota and its business economy at local, regional and national

The City of Saint Peter, which is part of the Regional Economic Development Alliance, has adopted a concise message that was crafted by a local business when they were sharing their experience about coming into the area. It’s one St. Peter likes to share with any developer or site selector interested in making an investment in the community. The business outlined that, “Saint Peter rolls out the red carpet instead of the red tape.” Seeing is believing and the Greater Mankato area has a lot to show off. Past site selectors visiting the community have provided positive feedback on our access to education, our infrastructure, and our opportunity to capitalize on our agricultural prowess. By having these discussions on the Fam Tours GMG is able to begin building professional relationships with site selectors who influence which communities see new businesses, job growth and economic activity. For more information about Greater Mankato Growth’s site selection services visit: greatermankato.com/siteselection-services.

MN Valley Business • June 2015 • 39

Greater Mankato Growth

Just as a business owner may share his new lunch menu items available for catering at a Business After Hours, GMG relates to national site selectors such things as the new infrastructure investments in our community, the available workforce, the amenities prospective employees can enjoy and what makes us stand out over all other communities. A site selector may be a real estate broker, a financial expert, a business owner, or a number of other things. Most importantly this is the person in charge of evaluating a company’s next expansion location.

According to GMG’s newest staff member New Business Development Director Jim Santori, “Developing relationships is key to growing any business and a community is not much different. By bringing in a site selector to show them the community, GMG is able to share key points of contact in the community, the business opportunities in the marketplace and an understanding that we are a business-friendly community..”

New Sculptures Arrive in the City Centers

he fifth installation of the CityArt Walking Sculpture Tour is here, featuring thirtyone new sculptures in the City Centers of Mankato and North Mankato. This year’s tour is impressive with many large scale, interactive pieces such as Greg Mueller’s “Street Seat” made from repurposed vehicular street signs and Dale Lewis’s, “Godzilla” greeting passersby on Belgrade Avenue in North Mankato. The sculpture walk also includes beautiful bronze pieces that are alive with storytelling, such as, “May Flower”, by Susan Geissler and “Da Fans” by Lee Leuning and Sherri Treeby installed in Cherry Street Plaza on South Front Street.

Greater Mankato Growth

Vote for your favorite sculpture either online or by completing the voting ballot found in the CityArt Walking Sculpture Tour brochure. The sculptures will be on display from now until April 2016 and are available for sale or lease. For more information regarding the CityArt Walking Sculpture Tour and to vote for your favorite sculpture, visit: citycentermankato.com/ walking-sculpture-tour

An event of:

“May Flower” by Susan Geissler

40 June 2015 • MN Valley Business 1 •• JANUARY 2013 • MN Valley Business

Navigating through greatermankato.com Resources available on Greater Mankato Growth’s website, greatermankato.com

A top community for young people, the fifth safest city in the state and the most affordable college town in Minnesota are just some of the rankings and ratings that the Greater Mankato region has received. The rankings and ratings webpage found at greatermankato.com showcases multiple reasons why the Greater Mankato region is a great place to live, work and play. With clickable links to additional information about each list item and downloadable PDF version of the webpage the rankings and ratings webpage is your ideal resource to showcase the awards and accolades of the community.Visit greatermankato.com/rankings-ratings for more info.

5:00 - 7:00 pm June 2 July 7 August 4 September 1 October 6 November 3 December 1

First National Bank Minnesota & Tavern on the Avenue Cambria Unique Specialty & Classics Mayo Clinic Health System - Eastridge I+S Group Blethen, Gage & Krause Gislason & Hunter

2015 Business After Hours Sponsored by:

June 17 July 15 August 19 September 16 October 21 November 11 December 16

McDonald’s Restaurant, Madison Avenue Brennan Companies,Vanderberg Cleaning Services & Friesen’s Family Bakery & Bistro in Old Town Center Minnesota Valley Federal Credit Union Monarch Meadows South Central College Enventis Wells Federal Bank

2015 Business Before Hours Sponsored by:

April Business Before Hours hosted by Hilltop Florist & Greenhouse

Business After 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 more information on these and other member events, visit greatermankato.com/events.

MN Valley Business • June 2015 • 41

Greater Mankato Growth

April Business After Hours hosted by Community Bank

7:30 - 9:00 am

Growth in Greater Mankato NEW BUSINESS

GRAND REOPENING

NEW BUSINESS

Mainstream Boutique 1901 Madison Avenue East Mankato, MN

Mankato Ford 1935 Madison Avenue Mankato, MN

River Valley Running 1849 Adams Street Mankato, MN

Greater Mankato on the Green is just a few months away and registration is filling up fast. This event provides the opportunity to network at one of the best business golf tournaments in the region.Make sure to mark your calendars and join us for this popular 18 hole golf tournament.

Cavaliers

Cavalier Calls on the Newest Greater Mankato Growth Members

Camp Pillsbury 315 South Grove Avenue Owatonna, MN camppillsbury.com

Monday, July 13 Mankato Golf Club

Greater Mankato Growth

Visit greatermankato.com/ greater-mankato-green for more information. American Heart Association 4701 West 77 Street Edina, MN americanheart.org

Discover Chiropractic - Nicollet 304 Pine Street Nicollet, MN mankatochiropractor.com

Baxter’s Hair Shop 1633 Monks Avenue Mankato, MN baxtershairshop.com

Freedom Home Care, LLC 209 South Second Street, Suite 202 Mankato, MN freedomhomecarellc.com

42 June 2015 • MN Valley Business 1 •• JANUARY 2013 • MN Valley Business

Visit Mankato Honors Hospitality Award Recipients in Celebration of National Travel & Tourism Week By: Kathryn Reeder, Brand Manager,Visit Mankato

n celebration of National Travel & Tourism week,Visit Mankato honored four local hospitality personnel to recognize the outstanding service they provide to Mankato visitors each day. The four award categories include: hotel, restaurant, retail and attraction. The awards are given in observance of National Travel and Tourism week, which is presented by U.S. Travel and celebrated its 32nd year May 2-10.

Linda Osborne, Hotel Award Recipient

Linda Osborne, General Manager of the Country Inn and Suites, was awarded the Hotel Travel & Tourism Award for exceling at letting guests know everything Mankato has to offer and where to go for what to do. Eric Jones, Marketing Manager of the Verizon Wireless Center, was awarded the Attraction Travel & Tourism Award for his dedicated work in bringing excellent variety of entertainment to Mankato, each unique event attracting thousands of people to the community. Eric’s event face is always a smile and he conquers events flawlessly.

Eric Jones, Attraction Award Recipient

Heather Fisher, Co-owner of Salvage Sisters, was awarded the Retail Travel & Tourism Award for her unique retail concept and endless support of local businesses. Heather and Salvage Sisters bring people in from all over the region.

Meg Sieveck, on behalf of Heather Fisher, Retail Award Recipient

Congratulations again to our 2015 Travel and Tourism award winners. The Mankato hospitality industry is proud to have such wonderful ambassadors.

Najwa and John Massad, Restaurant Award Recipients

MN Valley Business • June 2015 • 43

Greater Mankato Growth

John and Najwa Massad, the owners of Olives, Massad’s and Najwa’s Catering, were awarded the Restaurant Travel & Tourism Award for the hospitable feel visitors receive when entering one of the Massad’s establishments. The family owned company brought its ethnic flare to Mankato over 20 years ago and has been successfully serving citizens and visitors since.

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I have people tell me what they’ve spent playing one round at Pebble Beach and a night at the hotel, or going to Pinehurst for a couple rounds. We do the entire week, travel, hotel, green fees, good meals and everything for the price of one day at these places. And it’s absolutely a sensational place to come. TO PLAN YOUR VISIT to Alabama’s Robert Trent Jones Golf Trail, visit rtjresorts.com or call 1.800.949.4444 today. facebook.com/rtjgolf twitter.com/rtjgolf