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TAKING CONTROL OF MY FINANCES How do I Create a Financial Plan? With the stock market roaring after the elections, Congress discussing various sections of the tax-code and the Federal Reserve contemplating the future level of interest rates, now is a great time to organize your finances with a comprehensive financial plan. In today’s world, every household decision raises issues about money. Whether you are paying holiday credit card bills, selecting employer benefits for 2017 or determining what amount you should be saving for retirement, they all have an effect on your future financial health. You may feel overwhelmed when it comes down to understanding these issues and the role each plays within your personal finances. Even more overwhelming are the numerous financial choices you have today and determining which is right for you. With so many questions and so much at stake, where do you start? Get Some Advice A wise first step would be to seek the advice of a Certified Financial Planner. A seasoned CFP possesses a broad array of financial knowledge and will help assess your current financial situation right down to the last penny. Because each area of your finances has a cause and effect with the other areas, the CFP will help you determine your personal/financial goals and chart a course towards reaching those goals.

What Is In a Financial Plan? A financial plan takes into account all aspects of your finances and how they interrelate. It gives you a better understanding of what steps you could take, such as: • • • • •

Paying down debt Saving for retirement Changing your estate plan Saving for children’s college Making a large purchase

The CFP can help you understand what’s important to you and prioritize the steps toward accomplishing your goals. Stay Vigilant After these recommendations have been implemented, your financial plan should be monitored on a regular basis. This will enable you to see if you remain on track to meeting your desired goals even if you encounter a life-changing event. One thing is certain, change is constant—so staying abreast of these changes and making adjustments to your financial plan is paramount to your success. Whether you earn $30,000 a year or $300,000, there is undoubtedly one Financial Planner in your life now: You! Getting started today is the key to your financial future.

By: Ryan Spaude, CFP Ryan Spaude has more than 19 years of experience as a financial planner and has been named Best Financial Planner in the Best of Mankato Magazine for both 2015 and 2016. Contact at 507.304.6926 or rspaude@eidebailly.com

Financial Advisor offers Investment Advisory Services through Eide Bailly Advisors LLC, a Registered Investment Advisor. Securities offered through United Planners Financial Services, Member of FINRA and SIPC. Eide Bailly Financial Services, LLC is the holding company for Eide Bailly Advisors, LLC. Eide Bailly Financial Services and its subsidiaries are not affiliated with United Planners.

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Happy New Year, Honey! I Want a Divorce.

ery few things start a year off worse than being served with divorce papers or told that your spouse no longer wants to be married to you. Once the holiday hangover has cured and the credit card bills appear, a divorce attorney’s doors seem to swing open and shut much more frequently. They say that knowledge is power, so even if your own marriage is blissfully intact, as a business owner, you should understand a few key points about divorce . . . just in case. 1. Start With A Prenup. If you are not yet married, consider a comprehensive prenuptial agreement. While not the most romantic gesture, these agreements (sometimes combined with buy/sell agreements within your business) can help mitigate financial risk. If you are already married, a postnuptial agreement can achieve similar goals.

2. Protect Your Separate Assets. Assets acquired before marriage, or assets that one (but not the other) spouse acquires by gift or inheritance during the marriage, are referred to as “nonmarital property.” Nonmarital property is usually not subject to division in a divorce proceeding if it is properly protected. Depending on the circumstances, appreciation in value of nonmarital property occurring during the marriage may be protected as well. Particularly with multigenerational family businesses, a little bit of legal planning can go a long way.

3. Business Valuation is Both Art and Science. Your business’s value may be the most important issue in a divorce proceeding. Sometimes valuation experts are necessary, but not always. Before you begin negotiating with your spouse, understand the many issues that may be lurking ahead. 4. Cash is King. It is important to keep in mind personal and business cash flow and needs. Keeping your business is not worth it if you will be unable to reasonably stay afloat once the divorce is over. Too often, the long-term effects of a decision are not properly included in the analysis because emotion gets in the way. 5. Structure Matters. If cash is king, structure is queen. Do not forego opportunities to take advantage of tax strategies or financial settlement structures that creatively provide you (and maybe even your soon-to-be-exspouse) with a better life moving forward. Andrew Tatge is a family law attorney and partner with Gislason & Hunter LLP (www. gislason.com), practicing out of the firm’s Mankato and New Ulm offices. He regularly represents divorce clients who own farms, businesses, and professional practices, as well as other high income and high net worth cases. This information is general in nature and should not be construed as tax or legal advice. MN Valley Business • january 2017 • 1

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F E A T U R E S Januar y 2017 • Volume 9, Issue 4

2016 wasn’t a blockbuster year for development in the Mankato area, but it was solid. Single-family building is bouncing back, while apartment construction may be slowing.

Jesse Olsen is bringing his success in custom-made stock car frames to Mankato, expanding his Medieval Chassis business to the Eastwood Industrial Park.

Jes Tano and Denise David are co-owners of Whimsy and Weathered, which offers monthly sales of repurposed furniture from several different local designers.

Steve Kang and Zack LeClaire believe there’s a good market for people who are interested in buying high quality clothing. They recently opened BlackBlue in Old Town.

MN Valley Business • January 2017 • 3

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January 2017 • VOLUME 9, ISSUE 4 PUBLISHER Steve Jameson EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Heidi Sampson Dean Swanson Dan Greenwood PHOTOGRAPHERS Pat Christman Jackson Forderer COVER PHOTO Pat Christman PAGE DESIGNER Christina Sankey ADVERTISING Phil Seibel MANAGER ADVERTISING Jordan Greer Sales Josh Zimmerman Marianne Carlson Theresa Haefner Thomas Frank ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Justin Niles DIRECTOR For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6336, 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.....................................5 ■ Business Commentary.........................8 ■ Business and Industry trends..........20 ■ Retail trends.....................................21 ■ Construction, real estate trends.....22 ■ Gas trends........................................23 ■ Stocks...............................................23 ■ Agriculture Outlook..........................24 ■ Agribusiness trends..........................25 ■ Minnesota Business updates............26 ■ Job trends.........................................26 ■ Greater Mankato Growth..................28 ■ Greater Mankato Growth Member Activities ...........................30

From the editor

By Joe Spear

Mankato region poised for steady economic growth

ou might say the Mankato region is in for a 2017 economy that is “Minnesota

nice.” Not too exciting or exuberant but not too bad either. The most positive aspect of the local economy continues to be its diversity of industr y and employment. We’re not too heavy in big manufacturing industries nor overwhelmed with service and retail. The Mankato region’s big employers continue to be health care, education, services, retail and manufacturing. And while agriculture will be down, it doesn’t have the huge economic impact on employment. That diversity protects the area from big ups and downs in the consumer economy. In a particularly hopeful sign, the housing market seemed to grow steadily stronger in 2016, where the number of new single family homes in Mankato went up more than 50 percent from 67 in 2015 to 115 in 2016. If we measure the economy by the traditional business planning strategy of strengths, weaknesses, opportunities, threats, or SWOT, we can put the diversity of the economy in the strengths category. Surely the medical and educational industries in the region are somewhat recession resistant and both are benefitting from a rapidly growing population base. But both also are exposed to retrenchment by cost cutting in the medical field and by potential government budget cuts in the education field. The educational attainment of the population remains a longterm strength. Demographic studies show the region with anywhere from 60 percent to 80 percent of workers with some college education. Weaknesses in the region run

4 • January 2017 • MN Valley Business

along some of the same lines as the strengths. Employers continue to find it difficult to hire qualified employees. An employment rate in the 3 to 4 percent range remains very low, which is good for workers but bad for employers trying to hire people. By some reports, average wages in the region continue to lag behind statewide and metro numbers. While the average gets pulled down by the loss of manufacturing jobs, other industry wages are being pulled up, especially with the opening of the Wal Mart distribution center that is in its second year of operating. When it comes to opportunities, both Mankato and North Mankato report ample supply of solid developable land for commercial and industrial uses. Land prices appear to be in the ballpark for various national chains. And property tax rates are ver y competitive compared to other cities of similar size in Minnesota. Threats remain in the national economic landscape that seems uncertain now with the new administration of Donald Trump. Yes, the stock market has skyrocketed since the election, but interest rates and gasoline prices also appear headed higher. The markets may be building in optimism about a Trump presidency, and even though Republicans also control Congress, there is likely to be disagreement on some major issues like trade and deficit spending. Because disagreement within a party is typically rare, when things don’t fall into place, the markets may react in the opposite direction they are now headed. Joe Spear is executive editor of Minnesota Valley Business. Contact him at jspear@mankatofreepress.com or 344-6382. Follow on Twitter @jfspear.

Local Business People/Company News

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Ag applicator honored

AGCO Corp. named Tony Kornder with Genesis Growing Solutions in Le Sueur the Operator of the Year. Respected for his efficiency and ability to train new applicators, Kornder was selected for the honor following interviews with four finalists. He was recognized during the Agricultural Retailers Association Conference in Orlando. With 19 years of application experience, Kornder applies on about 35,000 acres each year. Ag retailers across the country nominated more than 40 applicators for the award. Kornder received a new HarleyDavidson motorcycle as part of the award. ■■■

Murphy named manager

U.S. Bank has named Mark Murphy commercial banking relationship manager. Murphy is responsible for managing and leading a broad portfolio of existing and new business relationships. He works at the U.S. Bank office located at 115 E. Hickory St. in Mankato. Murphy has over 17 years of experience in the banking industry and earned bachelor’s degree from Minnesota State University. ■■■

Floatation therapy business open

Inner Vitality, a floatation therapy center, has opened at 301 Madison Avenue Suite 305 in Mankato. The business is owned by Tricia Frederick who said the floatation tanks offer a variety of benefits. “The floatation tank gives the body time to relax. While the healing benefits of relaxation have long been documented, the intense relaxation of floatation therapy is unique to the lowgravity environment that floatation tank provides. This is especially beneficial for those

with injuries or chronic pain.” www.innervitalitymankato.com ■■■

SMMPA report honored

The American Public Power Association selected Southern Minnesota Municipal Power Agency to receive one of its Excellence in Public Power Communications Awards. The 2015 SMMPA annual report received the Award of Excellence, APPA’s highest award for public power communications. SMPA’s 2015 Annual Report, which was distributed in April of 2016, takes a unique approach to telling the story of SMMPA and its members. In the style of graphic novels, the cover illustration portrays a fictional SMMPA character as an action hero who represents all member communities. Inside, each spread features a 3-panel scene with rapid-fire dialogue.

a finance assistant in St. James. She has completed the Graduate School of Banking’s Financial Managers School and the Community Bankers School. Samantha Paris is a graduate of South Central College. She is a mortgage/personal banker in St. James. Marie Krause, a graduate of St. Mary’s University, is a personal banker in North Mankato. She has completed the Minnesota Bankers Association’s Consumer Lending School. Travis Elg, a graduate of MSU, is an ag/business banker in St. James. He has completed the National School for Experienced Ag Lenders. Pioneer Bank has more than $400 million in total assets and has offices in Mankato, North Mankato, St. James, Mapleton, Madelia, Lewisville and a loan production office in Lake Crystal. ■■■

Bolton & Menk honored

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Survey Services joins Bolton

Survey Services has become part of Bolton & Menk. Sur vey Ser vices is a land surveying firm serving clients in southern Minnesota since 1978 and has a long history in all areas of land surveying. Survey Services will continue to work with existing clients and, for the time being, will maintain its current office at 151 St. Andrews Court, Suite 400 in Mankato. ■■■

Pioneer Bank promotes 5

Five people have been promoted to assistant vice president positions at Pioneer Bank. Jennifer Wiens, a graduate of Minnesota State University is a business banker ser ving the bank’s Lake Crystal and North Mankato locations. She has completed the Minnesota Bankers Association Commercial Lending School. Alison Elg, a MSU graduate, is

Bolton & Menk was honored with two awards at the 2016 American Public Works Association - Minnesota Chapter annual conference. The city of Mankato water treatment backwash reclamation project received the Environmental Stewardship Award for their innovative water reclamation treatment process that is now saving 450,000 gallons of water per day. The city of Buffalo’s Highway 25 downtown cor ridor improvements received an Honorable Mention Award for the work done to create a safe multimodal corridor for vehicles, pedestrians, and bicyclists. ■■■

Gislason adds attorneys

Gislason & Hunter has added attorneys Seth Harrington and Christopher Bowler to the New Ulm office. They focus on banking law, corporate and business law and agriculture law. Harrington received his Juris Doctor of Law in 2016, summa

MN Valley Business • january 2017 • 5

Beautiful floors with a cause Rickway is proud to carry the Shaw Floors Collection for St. Jude which helps support the St. Jude mission: Finding cures. Saving children.® (Insert Dealer’s name) is proud to carry the Shaw Floors Collection for St. Jude which helps support the St. Jude December 31, 2018 with a minimum annual donation of $200,000. mission: Finding cures. Saving children.® All amounts in U.S. dollars.

Shaw Floors and its retail partners will collectively donate $.20 cents of each square yard of carpet purchased to St. Jude Children’s Research Hospital® from January 1, 2016 to

cum laude, from Mitchell Hamline School of Law. He graduated from the University of Minnesota in 2009. Bowler received his Juris Doctor of Law in 2016, cum laude, from the University of Minnesota Law School. He graduated from Northern Michigan University in 2013. ■■■

Kluender honored

Joe Kluender of Farm Family Dynamics was honored as a Fellow of the Family Firm Institute at the 2016 FFI Global Conference. He was also awarded an Advanced Certificate in Family Business Advising. FFI status signifies he completed an advanced program of study as part of the Family Firm Institute’s Global Education Network.

Shaw Floors and its retail partners will collectively donate $.20 cents of each square yard of carpet purchased to St. Jude Children’s Research Hospital® from January 1, 2016 to December 31, 2018 with a minimum annual donation of $200,000. All amounts in U.S. dollars.

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R Henry honored

Kailee Helget, of R Henry Construction in Mankato, was honored with a Design Inspiration Award for traditional kitchens. Judges said: “The design really seems to come alive with all the special touches added; such as the reading glasses and newspaper.” Designers from across north America submitted 350 kitchen designs to 2020 Design. ■■■

SCORE honored

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The South Central Minnesota SCORE Chapter 710 was named district chapter of the year. Chapter 710, which is hosted at Southern Minnesota Initiative Foundation, showed increased activity, growth, mentoring and outreach to achieve this award. Chapter 710 has 30 active members who meet with 10 businesses on a monthly basis. The Chapter’s volunteers log an average of 30 hours per month in confidential mentoring of clients, both entrepreneurs and longterm business individuals. In the past year, more than 110 clients received expert mentoring from SCORE’s Chapter 710 volunteers.

The chapter board chair is Diane Wilson. ■■■

Pathstone honored

Ecumen Pathstone Living in Mankato has received a “Best Nursing Home” rating by U.S. News & World Report magazine. Fewer than 13 percent of nursing homes in the nation achieve the “best” status. Ecumen received a 5.0 rating — the highest rating possible. “We are so pleased to receive this national recognition,” Jennifer Pfef fer, executive director said in a statement. “This is a major accomplishment and a high compliment to our outstanding staff.” U.S. News evaluated more than 15,000 homes nationwide, across each state and in 100 major metropolitan areas. This year, just over 2,000 nursing homes earned the designation of a U.S. News Best Nursing Home. ■■■

Roelofs reelected

Bob Roelofs of Vernon Center was reelected to a three-year term on the Minnesota Farm Bureau Federation Board of Directors to represent District II. The district includes the counties of Blue Earth, Brown, Car ver, Faribault, Le Sueur, Mar tin, McLeod, Nicollet, Renville, Scott, Sibley and Watonwan.

providing support services to people with physical, cognitive, intellectual, and mental health support needs. ■■■

Clifton makes promotions

Clifton Larson Allen has promoted Brad Boettcher to principal and Sarah Cramblit to signing director. Boettcher has 11 years of experience providing tax and consulting services to privately held businesses and their owners.

✓ Sales ✓ Leasing ✓ Retail ✓ Office ✓ Warehouse ✓ Industrial ✓ Development

He holds a Bachelor of Science in accounting and a Master’s in taxation degree. Cramblit has 10 years of experience in the assurance group auditing governmental entities, federal programs and non-profit agencies. She holds a Bachelor of Arts in public accounting.

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MBW acquires Glesener’s

MBW Co. based in New Ulm has purchased the assets of Glesener’s Inc. in Bird island. Glesener’s was incorporated in 1992 with the purpose of developing services for adult survivors of brain injury. Over the past 24 years, Glesener’s has offered assisted living, hourly, and adult day services in Bird Island. Glesener’s name sake and owner, Mark Glesener, was looking for a retirement succession plan of employee ownership and chose MBW. MBW Company is a 100 percent employee-owned business

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MN Valley Business • january 2017 • 7

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Business Commentary

By Dean Swanson

Tips for growing your small business in the coming year

s a new year begins it is time for small business CEOs to start reflecting on last year’s business experience and begin looking toward how they may need to or want to grow their business. That was a common topic for a recent small business CEO discussion group. In fact, the leading question at this session was “What’s the number one challenge facing your business?” I was curious because this was one of the items included in The National Small Business Association’s 2016 Mid-Year Economic Report. That report found that “economic uncertainty” was the big concern. Forty-nine percent of the respondents, most of them

owners of companies with five or fewer employees, say economic uncertainty is the biggest problem they face. Nor are they expecting relief anytime soon: 54 percent believe the economy will remain flat in the coming 12 months. But, I point out that small business owners aren’t as pessimistic about their own futures as they are about the national outlook. Some 72 percent are confident about their businesses’ futures, and 57 percent expect their sales to increase in the next 12 months. One-third of small business owners surveyed also plan to hire employees in the coming 12 months. In fact, 12 percent plan

to increase their work force by more than 10 percent — the highest this indicator has been since the NSBA started asking the question. At the same time, the number of small business owners who plan to decrease their workforce is the lowest it’s been in more than eight years. Existing employees as well as new hires are benefiting from small business owners’ confidence. More than four in 10 small business owners (44 percent) say they increased employee compensation over the last 12 months, while 51 percent say they plan to do so in the next 12 months.

Advice from CEOS

1) 45 percent say they plan to implement new advertising and marketing strategies.

2) 30 percent plan to use strategic alliances. Forming a

I asked one of my favorite small business experts, “How are small business owners powering this growth?” Rieva Lesonsky (CEO of GrowBiz Media, a content and consulting company specializing in covering small businesses and entrepreneurship) always has some well researched comments and advice. Here’s what they plan to do in the next 12 months—and what I feel are items that small business CEOs can learn from it.

Review your existing marketing plan and the results of each marketing method. Are there areas you need to cut back on or improve? Can you put more money into the most effective methods? Do you need to get out of your comfort zone into digital advertising, social media advertising, content marketing or mobile marketing? New marketing methods and channels are popping up just about every day, so if you’re resting on your laurels, you could get left behind.

8 • January 2017 • MN Valley Business

relationship with another business, big or small, can benefit your business in so many ways. You can launch a new product or service, or expand into a new geographic or demographic market, by benefiting from your alliance partner’s connections, sales channels and brand. You can share the work involved, bringing new ideas to market faster than you could on your own. You can also lessen the investment required to achieve your goals as well as decrease the risk if an idea doesn’t pan out.

3) 28 percent plan to expand e-commerce.

If you’re not already involved in e-commerce, now is a good time to reconsider. E-commerce isn’t just for retailers, either. A restaurant can sell a proprietary salad dressing online; a personal trainer can sell subscriptions to fitness videos; a bar can sell branded T-shirts. Think about what you could sell and how adding an e-commerce presence could benefit your business.

4) 25 percent plan to launch a new product line. Do your homework before investing in a new product or service launch. Just as you would with a brand-new business, conduct market research to understand your competition and your target market. Survey existing customers and prospective customers about your idea, either online, in person or with a focus group. Assess the resources you’ll need—in terms of time, employee hours and financing—to pull it off.

Your SCORE mentor can help with all the above growth strategies. Contact your local SCORE Chapter or visit www. score.org to get matched with a mentor who can offer advice and guidance. These volunteers do this at no charge.

E-commerce isn’t just for retailers, either. A restaurant can sell a proprietary salad dressing online; a personal trainer can sell subscriptions to fitness videos; a bar can sell branded T-shirts. Dean L. Swanson, Southeast Minnesota SCORE, is a volunteer SCORE mentor and regional vice president.

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MN Valley Business • january 2017 • 9

Rob Else (left) and Tony Frentz at the site on South Second and Main streets where they will build a new office and retail tower.

A good growth year

Manufacturing weakness could slow growth By Tim Krohn | Photos by Pat Christman

t wasn’t the best of years for economic development in 2016. “It wasn’t the banner years we had the previous two years, of course, where we had the Wal-Mart distribution center and a lot of other industrial developments,” said Mankato City Manager Pat Hentges. “The amount of private investment was not as strong as that.” But it certainly wasn’t the worst of years. “Our single-family (home building) pace is kind of back to where it was pre-recession. Hopefully that will continue on, that’s an important part of the economy.” John Harrenstein, city administrator in North Mankato, said 2016 saw decent industrial development

and said home building was a bit slow, in part he thinks, because of a lack of good ready to build lots right now. “The highlight was the opening of North Central Utilities in the business park. It was an adequate year for housing but a little slower,” Harrenstein said. There were 18 new single family homes built last year. “We’d like to be in the 30 to 50 range each year for homes.” Overall, single-family home building in the region seems to be pulling out of the near shutdown of construction seen during and right after the recession. Rich Weyhe, of R Henry Construction in Mankato, said they were busy last year building homes in the

Cover Story

10 • january 2017 • MN Valley Business

region, including Madison Lake and Eagle Lake. “It has come back this past year. We did more single-family new construction than any year previously.” He said there are a variety of customers. “We’re doing two or three for people moving into town, but a lot of people are already living here. Some are downsizing from the home they’re in and some are moving up,” Weyhe said.

Lots needed

Harrenstein suspects some of the slowdown in home building in North Mankato is a dwindling number of available lots. During the recession, some new subdivisions went into foreclosure. Many of those empty lots were taken over by other developers and built on two and three years ago. “I think as long as the market holds up, developers will move for ward with some new subdivisions next year,” he said. “In the Reserve, those lots have been mostly filled in and they’re looking at expanding that next year,” he said of the up-scale housing subdivision on the far north edge of the city. “Kodiak and Fairbanks (subdivisions) were in tax forfeiture but have been redeemed and built in. There are still some lots in Northridge and Coventry,” Harrenstein said. The City Council recently approved changes to minimum lot sizes to help spur building of more affordable, entr y-level homes. In some areas, he said, the cost of larger lots make it less economically viable for developers to build entry-level priced homes. Some of the changes include reducing the lot width from 75 feet to 60 feet and reducing the minimum side-yard setback from 10 to 6 feet. “That was directly related to the market requirements for entry level homes.” He said the changes were made on about 100 acres between Lor Ray Drive and Lookout Drive, north of Benson Park on the north end of town. The area is flat former farm land. “There are no ravines or thing

An architect’s drawing of the new building to be constructed at the corner of Main and South Second streets in Mankato. Drawing courtesy of ISG there that drive up the lot values. We made some adjustments (to lot size) to meet that reality or they likely wouldn’t have been developed,” he said. “We want to offer a variety of housing in the community for income ranges of all types.” There are other areas that are going to continue to be that 90 or 100 foot wide lot but this area was not going to have that. Beyond opening of North Central Utilities, a semi-trailer sales and ser vice business, Harrenstein said CPA firm Kitchenmaster, Klooster & Begalka opened a new office building near Culvers. Downtown, the second phase of the Marigold apartments were finished this year. Harrenstein said the industrial park continues to look strong for future development. “We have about 40 or 50 acres left for sale. We’re probably going to examine (adding) additional property, pending construction projects that would support the purchase.” “We are working with four to five companies at any given time to site them and we continue to deal with large corporations. I expect the addition of a couple of businesses next year, whether land acquisition or construction.” He said the new interchange on Highway 14 and County 41

(Rockford Road) has helped open up more of the industrial park to easy traffic access, particularly for semis. “I think the interchange really paid off.”

Mankato steady

Hentges said the strong year in residential construction included both single family and apartments, although apartment construction is trailing off. There were 115 single-family homes built last year compared to 67 in 2015. And Mankato saw about 120 units of apartments built or started last year, down from more than 500 in 2015. He said the apartment building boom in 2014 and 2015 has tapered off. “We’ll probably go back to the pre-recession normal.” Hentges said the big build of college and market rate apartments in recent years has opened up units in other apartments and he thinks developers will take a step back to see what the market looks like before adding a lot more new complexes. Hentges said commercial construction in the city looks good. Some new banks have been built, a new car dealership is underway and Eastridge Clinic announced expansion plans there

MN Valley Business • january 2017 • 11

in the near future. “It’s not the best year we’ve had but a good year.” One big project that was announce late in the year is a new seven-story or taller building featuring a restaurant, retail, offices and potentially housing at the corner of Main and South Second streets in downtown Mankato. “It’s exciting. It’s going to be a beautiful building. We envision it as a great gateway building as you come into the downtown core,” said Tony Frentz, who along with

We’re Local.

Bolton-Menk.com

Rob Else, is developing the site. Frentz said they have a signed lease with the Eide Bailly accounting and business advisory firm to bring its 80 plus employees to the new building, which will begin construction in 2018. A restaurant and retail space is planned for the ground floor and the top floor is to feature a large events center with catering facilities and an outdoor patio. Hentges said retail has seen some new construction and remodeling, including the soonto-be-renovated Old Countr y Buffet for a strip mall. “I’ve heard of some substantial makeovers in the big boxes coming, but we haven’t had any discussions with anyone for a big location coming like Fleet Farm did a few years ago,” he said. “We still have a substantial inventory of good, marketable commercial property. There are some prime spots along East Victory (Drive).” He said the healthcare sector locally continues to be a good driver of the local economy. Mayo is expanding Eastridge while the Mankato Clinic is expanding its North Mankato clinic location. “The medical market has a significant impact. A big increase in doctors and support people, that’s been a big thing in transforming our economy. It impacts retail sales and income levels and housing starts. In the last 15 years, that’s probably had the strongest impact on our economy.”

Manufacturing worr y

While the medical sector may be strong and housing construction good, Hentges said he has worries about the city’s ability to continue seeing strong growth in the future. “What concerns me out in the future, I get the impression that our manufacturing section of our economy seems to be struggling or a little stagnate. I’m not sure if it’s just energy-related or across the market. “I think we had a lot more optimism a few years about expansion and we seem to be struggling there,” Hentges said. He said manufacturing has always provided stability for the community and MSU’s electrical and engineering programs helped keep students employed locally after they graduated. “We’ve always been medical, retail, higher ed, government, manufacturing and ser vice – that’s a pretty envious position. “As we become less diverse in manufacturing we are more susceptible to the highs and lows of the economy,” he said. Hentges said keeping a strong and diverse economy drives growth and new construction and that helps all property taxpayers. New construction may bring an increase of 5 or 6 percent in the city’s tax base in a given year. “That allowed us to increase the levy to provide the services we need and not have any impact on existing taxes. That’s where our stability has been.” He said if the tax base becomes stagnant, the only way to increase the budget to keep up with

The former Old Country Buffet building across from River Hills mall is to be renovated into a strip mall for several businesses.

BUSINESS BANKING

12 • January 2017 • MN Valley Business

inflation and add some services is to increase taxes on property owners. He said that while the city has grown and demand for services has increased, the city hasn’t hired many people. “We haven’t really increased employment – it’s about 300 fulltime – for 20 years, other than in police.” “I’m most proud that our tax rates are very competitive in the state. And in greater Minnesota we are second only to Rochester.

Smaller homes

Weyhe said the return to stronger home building has come with some changes from the prerecession era. “People are moving away from the huge amount of square footage. We’re seeing a little smaller master bedrooms and some people are ditching the whirlpool tubs in the master bath and going with a more elaborate shower,” Weyhe said. More people – about 80 percent - are also skipping a formal dining room, he said. “The kitchen, dining and great room floor plans are all open.”

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He said he’s also noticed a few more people who are skipping the basement for a single level home. When they do have basements, more are adding separate steps to them from the garage. “We did four or five of those this year. If people come home from hunting or something they like to just walk down from the garage and clean up.” While new construction has picked up for them, Weyhe said remodeling is also staying strong. “One of the bigger reasons I think is they can’t find a lot that matches the lot they have now. Might have a nice lot overlooking city or something and even though a remodel might (cost) more than they’d make back reselling it, they just like the location they’re in.” He said things so far look good for the future. “It looks strong for next year. We have quite a few projects lined up for this spring. I’m hopeful things will continue to head in the right direction.” MV

MN Valley Business • january 2017 • 13

Jesse Olsen grew his hobby in stock car racing into a business that uses technology to increase the speed in stock cars such as this one. He’s expanding his Medieval Chassis business to Mankato.

Medieval Chasis Auto racer returns to Mankato

By Dan Greenwood

or Jesse Olsen, it began as a way to blow off steam on the weekends driving and engineering in stock car races. And with that new hobby his wheels started churning to fix a problem: how to use technology to lighten the load and increase the speed. Thus Medieval Chassis was born. With business booming, Olsen is expanding the operation from Mayer to Mankato, in the Eastwood Industrial Park. Olsen grew up in Mapleton. A family friend got him and his brother into stock car racing. “Scott’s Body Shop out of Mapleton – the owner needed a pit crew so we went, helped out and caught the bug. From there we built a car and the rest is history.” He founded Medieval Chassis in 2004

after finishing a degree in automotive engineering at Minnesota State University. He said the business name came down to his own fascination with an earlier era. “As gor y as the medieval times might have been, there was a lot of good engineering in that period,” Olsen said. While a chassis is essentially a roll cage that creates the safety component within a car, Olsen emphasized how redesigning the front suspension of the chassis in a stock car contributes to its performance as well. He compares the chassis to the engine or any other vital organ of the vehicle, like a piece of a puzzle. Olsen said that stock car engineering and racing used to be eclipsed by higher class fabricated vehicles used for professional racing.

Cover Spotlight

14 • January 2017 • MN Valley Business

One of the custom chassis frames built by Medieval Chassis. “When I first got into it, the stock car class wasn’t seen as the epitome of a class,” Olsen said. “Over the years more people have understood that there’s a lot of engineering, dynamics and talent within that class.” Olsen believes a resurgence and greater attention to the art and creativity behind good stock cars is a win-win for drivers and fans alike. He says the reason he got into the business in the first place was to put his engineering skills into a chassis that most people brushed off. As the company moves to Mankato, its clientele has spread nationwide. Olsen said the majority of his customers are weekend warriors who compete in races as a hobby. He said building a reputation has led to his success rather than an advertising campaign. “You could spend a million dollars in advertising and it wouldn’t get you anything because it really is word of mouth,” Olsen said. “If you have cars out there that win, people notice that.” He also said the sustainable growth of Medieval Chassis

allows an element of service not found in larger scale companies, with an emphasis on service and quality, whether they have a new customer or someone who has bought a used car from someone else. To continue on that path, the company would need to diversify its business plan to diverge and have a chassis division and a contract manufacturing division. That, he said, is what led him back to Mankato. “We did some research into what Mankato could offer versus a few other locations throughout the state,” Olsen said. “Everything pointed back to Mankato as a central hub for manufacturing, and the vendors and suppliers.” He also hopes he can use his expertise, engineering and

business model to inspire younger engineers at Minnesota State University to look outside the box when it comes to stock car racing. That includes collaboratively working on projects with the university’s Automotive Engineering Department for a hands-on approach to learning. That’s just one of the positive changes expected to come with the expansion. The equipment will allow them to make a better product and with a workforce growing from three to 11, Olsen will have more time to focus on the business side of expansion. They’ll also be working directly with smaller vendors in Mankato. “The business is not just race cars any more. I want to build the business to be a motor sports group for this area. There is no place where you can go and get parts, shocks and stuff for a dirt bike.” He expects to have the new shop in Mankato up and running by summer. In the meantime he can be found driving the weekend race tracks in places like Fairmont and Jackson as a weekend warrior. MV

MN Valley Business • january 2017 • 15

Whimsey and Weathered owners Denise David, left, and Jes Tano. Photo by Pat Christman

Whimsy Girls ‘Up-cycling’ business open in Old Town By Heidi Sampson | Photos by Pat Christman

o, what does a Whimsy Girl mean? For Jes Tano and Denise David, co-owners of Whimsy and Weathered, a Whimsy Girl is kind of artsy and kind of fun. But, at the same time, a Whimsy Girl is boss. “Whimsy is a part of our personality,” David said. “The Weathered side is for the restoring of items. Whimsy Girls are the people that work here. We started by introducing the staff/designers as whimsy girls, in which each was asked: What does it mean to you to be

a whimsy girl?” For David and Tano, the idea of a Whimsy Girl is best captured in the phrase, “brave is the Man that Loves a Whimsy Girl,” which graces one of the shirts for sale in their store. According to David, the kind of man who loves a Whimsy Girl has to be brave. For instance, her man might have to remove paintbrushes from the kitchen sink before he can wash dishes.

Profile

16 • january 2017 • MN Valley Business

Creation of Whimsy

Whimsy and Weathered is co-owned by Tano and David, a daughter – mother team. They have a love for design, pretty things, and Dolly Parton. David has a Master’s Degree in public administration, but can also run a skill saw or a chain saw. Her specialty is in restructuring pieces and giving them new purpose, which she calls up-cycling. Over the years she has also taught many community education courses. Tano’s design work started at a young age as she would watch her mother design elaborate Christmas displays in their home. To further her design expertise, Tano studied fashion merchandising in Miami, FL. When she returned home, she married and received her MBA. Her specialty is farmhouse tables and picking market decor.

Deconstruction to Bliss

Every month following a sale, Whimsy and Weather will be deconstructed from its previous design to look entirely different by the next sale. Since they are a full concept store, their main goal for customers is to feel as if they have entered one complete store vs. a store with one vendor here and one vendor there. Tano and David say they strive to bring all of the items together for a strong feeling of cohesiveness. Typically, once items are cleared out following a sale, the new furniture pieces will arrive roughly five days before the next sale, then small items will appear. Once the finalized look is achieved, those following Whimsy and Weathered on Facebook, will have sneak peek of items for the upcoming sale. Currently, Whimsy and Weather has right about 12

designer. Whimsy and Weathered tries to create a beneficial environment for each designer, while the designer creates in their particular niche.

Do-it-yourselfers welcome

Whimsy and Weathered also works with customers who want to complete a project themselves. Designers are able to supply details surrounding the background knowledge of the piece itself, and can give insights into how a piece was created. According to Tano, if you are a “do-it-yourself kind of person,” there really isn’t anything that anybody can do to change that. To assist those types of “do-it-yourself” customers with the painting process, Tano and David looked for two specific qualities in paint manufactures: they wanted a paint made in the U.S. and the paint company needed to be female run, as they wanted girl power or another Whimsy Girl kind of company. As a result of their search, Whimsy and Weathered carries several different colors and three sizes of paints, allowing customers to buy a sample size to see if the project is something they really want to do. “If you love a product of ours but you have something at home, or you are really crafty, we don’t want to necessarily convince you otherwise,” David said. “But we will help you along the way by talking about the paints that we carry, the finishes and things of that nature. All of our designers are very open to talking about pieces.” MV

MN Valley Business • january 2017 • 17

Zack LeClaire manages BlackBlue, a quality clothing store in Old Town.

BlackBlue By Heidi Sampson

Photos by Pat Christman

“F

ast fashion” – the ever-changing mass production of clothing sold for cheap and discarded soon for the next new trend – is considered by many to be leading contributor of the throwaway society. Steve Kang and Zack LeClaire believe there is a good market for people who are interested in buying better quality clothing for the long haul. Sometimes the pieces are referred to as heritage pieces, items that retain their luster, thickness and quality for the next generation. Their new store, BlackBlue in Old Town, opened recently. It’s owned by Kang and

managed by LeClaire. When Kang opened the first BlackBlue store in St. Paul, LeClaire would travel there to buy one or two pieces of quality clothes. Last spring LeClaire broached the topic of starting a BlackBlue location in Mankato, believing there was a need for high-end clothing at a good price. When Kang agreed to add a Mankato location, LeClaire already had his sights on a building at 401 North Riverfront Drive. LeClaire, who worked in construction for the past 12 years, completed the build-out of store in three weeks.

Feature

18 • January 2017 • MN Valley Business

BlackBlue opened recently at 401 North Riverfront Drive in Mankato.

High-end quality

Many of the brands BlackBlue carries are not usually available in the Mankato area: Filson, Gitman Bros. Vintage, Barbour, Carhart Wip, Levi’s Vintage Clothing, APC, The Hill-Side and Velva Sheen, brands that have been around many years. LeClaire has a deep knowledge of the brands he carries. S.N.S Herning, he says, was founded in 1931 by Søren Nielsen Skyt in Herning, Denmark. S.N.S. Herning’s sweaters were originally designed to withstand the harrowing gales of the of the Baltic and North Seas, and stand-up to the rigors of commercial fishing work. Renowned for their knitting technique of using a “bobble” pattern, all Herning sweaters are knitted for their insulating abilities. Today, the company also offers T-shirts, zip ups and more. “If you hold it, it’s a heavy shirt,” said LeClaire. “With the items in this store, customers buy something that isn’t going to go out of style. It’s more of a heritage piece. You spend money but it is part of your wardrobe for the long-haul. With clothes, I don’t ever go out and buy 10 things at a time. I buy one or two nice pieces here and there that are good quality. If they are asking $200 for a button up shirt, there is a reason for that. It’s the fabrics, the stitching, all of that counts and goes into play.” LeClaire said clothes shopping is not just grabbing something off of the rack, it’s touching it, knowing something about companies and their brand. “For myself,” said LeClaire, “I don’t have a problem

spending money for quality clothes because I know the brands. They stand behind their products. There are coats in this store that are guaranteed for life. It’s nice to have that, to know you’ll be taken care off.” Kang, who holds a Master’s from Carlson School of Management, opened his St. Paul boutique on Selby Avenue six years ago, turning what was a risky gamble into a successful business with a strong following. MV

Hours: Tuesday – Thursday 10-6 Sunday 12-4 Monday Closed MN Valley Business • january 2017 • 19

■

Business and Industry Trends

Energy Few turbine manufacturers

The federal government recently started collecting data on wind turbine manufacturers and found that, as of the end of 2015, just three manufacturers — General Electric, Vestas, and Siemens—accounted for 55 gigawatts, or 76 percent, of installed wind generating capacity in the United States. Of the 8.2 GW of total wind capacity installed in 2015, these three companies’ combined share is even greater, representing more than 92 percent of new capacity in 2015. Two other companies, Gamesa and Mitsubishi, also accounted for significant shares (6 percent and 5 percent, respectively) of wind turbine capacity. However, these two companies did not have a significant amount of new capacity installed in the United States in 2015. GE has consistently been the dominant manufacturer of wind turbines installed in the United States since it purchased Enron’s wind business (formally Zond) in 2002. Between 2005 and 2015, GE’s average annual share of installed capacity was 44 percent. According to Bloomberg New Energy Finance, the Chinese company Goldwind led in global wind capacity commissioned in 2015, manufacturing 7.8 GW, largely for installations in China.

20 • january 2017 • MN Valley Business

First offshore wind farm

The first commercial U.S. offshore wind farm, Block Island, came online in late 2016. Located three miles off the southeastern coast of Rhode Island, Block Island consists of five wind turbines that will produce 30 megawatts (MW) of electricity. The electricity will be used on Block Island, where electricity is currently supplied by diesel-powered generators. The high cost of current electricity sources on Block Island helps to reduce the economic hurdles typically associated with power from offshore wind. The developer, Deepwater Wind, began construction on the project in July 2015 and holds two additional leases off the coasts of Rhode Island and of Massachusetts for future developments. Although the Block Island Wind Farm was constructed in state waters, these additional leases are farther from shore in federal waters. State waters typically extend out to three nautical miles, and federal waters extend out to 200 nautical miles, forming a much larger area known as an exclusive economic zone. The National Renewable Energy Laborator y estimates that the United States has 4,200 gigawatts of potential offshore wind energy, with the majority of that potential in federal waters. Although local state agencies typically handle wind development in state waters, the Bureau of Ocean Energy Management

(BOEM) manages all wind development in federal waters.

Retail/Consumer Spending

Electric output up

Total U.S. generation of electricity from utility-scale plants will be 11.2 terawatthours in 2016, up 0.2 percent from 2015. Total utility-scale generation grows by 0.5 percent this year. The share of U.S. total utility-scale electricity generation from natural gas will average 34 percent in 2016, and the share from coal will average 30 percent. In 2015, both fuels supplied about 33 percent of total U.S. electricity generation. In 2017, natural gas and coal are forecast to generate about 33 percent and 31 percent of electricity, respectively, as natural gas prices are forecast to increase. Nonhydropower renewables are forecast to generate 8 percent of electricity generation in 2016 and 9 percent this year.

Oil prices rise

U.S. crude oil production averaged 9.4 million barrels per day in 2015, and it is forecast to average 8.8 million barrels per day in 2016 and 8.7 million in 2017. Forecast production in 2017 is more than 0.1 million barrels per day higher than earlier estimated. Brent crude oil prices are expected to average close to $48/barrel in the fourth quarter of 2016 and in the first quarter of 2017. Forecast Brent prices average $43 in 2016 and $51 in 2017. West Texas Intermediate crude oil prices are forecast to average about $1 less than Brent prices in 2017.

Natural gas slows

Natural gas marketed production is forecast to average 77.3 billion cubic feet per day in 2016, a 1.4 Bcf/d decline from the 2015 level, which would be the first annual decline since 2005. But production was expected to start rising late in 2016 as a result of increases in drilling activity and infrastructure buildout that connects natural gas production to demand centers. In 2017, forecast natural gas production increases by an average of 2.9 Bcf/d from the 2016 level.

Natural gas price up

Growing domestic natural gas consumption, along with higher pipeline exports to Mexico and liquefied natural gas exports, contribute to the Henry Hub natural gas spot price rising from an average of $2.50/ million British thermal units in 2016 to $3.12 in 2017.

CO2 emissions down

After declining by 2.7 percent in 2015, energyrelated carbon dioxide (CO2) emissions in the first six months of 2016 were the lowest for that period since 1991. For all of 2016, emissions are projected to decline by 1.5 percent, and then increase by 0.7 percent in 2017. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, and energy prices.

Vehicle Sales Mankato â&#x20AC;&#x201D; Number of vehicles sold - 2015 - 2016 1,110

870

1200 1000 800 600 400 200 0

Source: Sales tax figures, City of Mankato

Sales tax collections Mankato (In thousands)

- 2015 - 2016 $539

600

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

$450

500 400 300 200 100 0

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato - 2015 - 2016

$54,771 $49,477

70000 52500 35000 17500 0

Source: City of Mankato

Mankato food and beverage tax - 2015 - 2016 175000 140000

$66,525 $65,500

105000 70000 35000 0

Source: City of Mankato

C. Sankey

MN Valley Business â&#x20AC;˘ january 2017 â&#x20AC;˘ 21

Construction/Real Estate Residential building permits Mankato

Residential building permits North Mankato

- 2015 - 2016 (in thousands)

18000

$1,207 $2,968

13500

4000

9000

2000

4500

1000

Source: City of Mankato

$452 $542

3000

Source: City of North Mankato

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

Existing home sales: Mankato region - 2015 - 2016

Median home sale price: Mankato region - 2015 - 2016 (in thousands)

$153,500 $161,2500

250

300

214 192

240

200 150

180

100

120

60 0

Source: Realtors Association of Southern Minnesota

Source: Realtor Association of Southern Minnesota

Interest Rates: 30-year fixed-rate mortgage

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

Housing starts: Mankato/North Mankato

— 2015 — 2016 5.5

- 2015 - 2016 40

5.0

4.5

4.1% 20

4.0 3.5

4.0%

3.0

Source: Freddie Mac

Source: Cities of Mankato/North Mankato

Commercial building permits Mankato

Commercial building permits North Mankato

- 2015 - 2016 (in thousands)

- 2015 - 2016 (in thousands) $202 4000 $1,211

12000 10000

3000

$1,744

8000

$1,279

6000 4000

2000 1000

2000 0

Source: City of Mankato

22 • january 2017 • MN Valley Business

Source: City of North Mankato

C. Sankey

Gas Prices Gas prices-Mankato

— 2015 — 2016

5 4 $1.95

3 2

$1.89

1 0

Gas prices-Minnesota

— 2015 — 2016

5 4 3

$1.99

2 $1.90

1 0

Stocks of local interest Archer Daniels Ameriprise Best Buy Crown Cork & Seal Consolidated Comm. Fastenal General Growth General Mills Hutchinson Technology Itron Johnson Outdoors 3M Target U.S. Bancorp Wells Financial Winland Xcel

D C. Sankey

Source: GasBuddy.com

Nov. 1

Dec. 8

Percent change

$46.75 $87.70 $38.67 $53.49 $23.25 $38.40 $24.60 $61.63 $4.00 $53.35 $35.64 $164.25 $67.78 $44.46 $38.96 $1.93 $40.86

$45.97 $118.90 $49.31

-1.7% +35.5% +27.5%

$53.28 $27.63 $49.13 $26.33 $62.48 $4.00 $64.00 $44.70 $175.88 $77.84 $51.90 $38.75 $1.85 $39.25

-0.4% +18.8% +28% +7% +1.4% 0% +20% +25.4% +7.1% +14.8% +16.7% -0.6% -4.1%

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-3.9% C. Sankey

MN Valley Business • january 2017 • 23

â&#x2013;

Agricultural Outlook

By Kent Thiesse

Farmers will have to manage carefully this year

s we look ahead at 2017, it appears that the tight profit margins that have existed in crop production in the past two years are likely to continue. The combination of continued lower projected market prices for corn and soybeans in 2017, together with only minor reductions in input costs for seed, fertilizer, and chemicals, will limit estimated potential returns over direct expenses and land costs, at average crop yields. Another major variable in breakeven levels in crop production are loan payments on capital investments such as farm machinery, facilities, and land purchases. About two-thirds of the corn and soybean acres in southern Minnesota are under some type of cash rental agreement. Based on farm business management records for southern third of Minnesota, the average land rental rate in 2015 was near $235 per acre, although there was a wide range in rates across the region. This was a decline from an average cash rental rate of near $250 in both 2013 and 2014. Most likely, average cash rental rates for 2016 in many areas of the region were either nearly the same as the as 2015 rental rates or declined slightly. Based on early reports from farm operators, it appears that land rental rates for 2017 in some locations across the region may adjust slightly downward, however many rental rates remain quite high. The University of Minnesota Center for Farm Financial Management has a website called FINBIN, which allows farm operators, ag lenders, farm management advisors, and others to look at average income levels, direct and overhead expenses, and net return levels on farms. The data in FINBIN is based on actual farm management data submitted by producers. All FINBIN data and farm management tools can be accessed at the following web site: www. finbin.umn.edu Based on a FINBIN analysis for the years 2013-2015 of more than 800 crop farms on cash rented corn acres in sourthern Minnesota, the average net return over average direct and overhead expenses, including land rent, was calculated at a negative ($36.53) per acre per year. Further analysis showed that there were negative averages of nearly ($7) per acre net return in 2013, over ($44) per acre net return in 2014, and a negative ($56) per acre net return in 2015. It is likely that 2016 will again show a negative average net return for many producers, even with the above average crop yields that existed in many areas. Breaking down the FINBIN analysis a bit more indicated an average corn yield of 206 bushels per acre in 2015, which was the highest ever in the farm business management groups in southern Minnesota.

24 â&#x20AC;˘ january 2017 â&#x20AC;˘ MN Valley Business

This compares to average corn yields of nearly 167 bushels per acre in 2014. Average corn yields in 2016 were similar to 2015 in some areas but lower in other areas, due to the very wet weather in some areas. The average corn price received by farmers in 2015 was $3.52 per bushel, which was down from average prices of $3.97 per bushel in 2014 and $4.49 per bushel in 2013. In addition, producers received an average of $148 per acre in crop insurance payments in 2014, and just over $100 per acre in 2013, which compared to less than $2 per acre in 2015. Average corn prices received by farm operators in 2016 is likely to be down slightly from the 2015 average price, and 2016 crop insurance payments will again be minimal in most areas. The average total cost of direct expenses for corn production, excluding land rent, was near $445 per acre in 2015, which compares to $497 per acre in 2014 and $517 per acre in 2013. The biggest portion of the reduction in operating expenses was due to reduced fertilizer expenses and lower fuel costs. Corn drying expense was also lower in 2015 than the previous two years, due to the ideal growing season. Costs for seed, crop chemicals and most other inputs have remained fairly steady over the three-year period. Crop expenses in 2016 were probably similar to 2015 for many corn producers. Overhead expenses for machinery, labor, term loan interest, etc. was near $110 per acre in 2015, and has also remained fairly steady in recent years. The average direct and overhead cost per bushel of corn produced in southern Minnesota in 2015 was $3.83 per bushel, which compares to $5.15 per bushel in both 2013 and 2014. The 2015 reduction was primarily due to the record corn yields in 2015. If we assume similar production expenses, land rental rates, and overhead costs for 2016 (approximately $790 per acre), the breakeven corn price would be $4.27 per bushel with a yield of 185 bushels per acre, $4.05 per bushel at 195 bushels per acre, and $3.85 per bushel at a yield of 205 bushels per acre. The cash corn price for the 2016 corn crop at most locations in the region has been $3.00-$3.25 per bushel. As we plan ahead for another year of tight margins for 2017, it is a good time for farm operators to review all aspects of a crop operation. Looking for ways to reduce or control direct and overhead expenses, including land rental costs, is also a key to improving profit potential for crop producers. Decisions that are made on crop marketing and crop insurance, as well as potential payments from the government farm program, can also have a significant impact.

Farm management strategies

Agriculture/ Agribusiness

1. Know your cost of production…… this

is a key for making grain marketing decisions, knowing where to lower production costs, and other management decisions.

2. Crop yields are still important to profitability…… as producers consider plans to reduce production expenses, they need to make sure these reductions are not having a negative impact on crop yield potential.

Corn prices — southern Minnesota

(dollars per bushel)

— 2015 — 2016

$3.20

6 4 2

3. Optimize crop insurance options……

crop producers need to review crop insurance options for 2017, and make an effort to find an option that fits with their risk management plan.

4. Negotiate land rental contracts with Landlords…… there may be opportunities to

lower some very high land rental rates, or to convert to a “flexible lease” agreement, or to drop some “high rent” land.

$3.03

Source: USDA

Soybean prices — southern Minnesota

(dollars per bushel)

— 2015 — 2016

20 16

$9.45

12 8

5. Sharpen grain marketing skills…… no

matter what level grain prices are at, there is usually a large difference in average prices for corn and soybeans that are available throughout the year.

$8.26

4 0

Iowa-Minnesota hog prices

6. Use caution with capital investments …… from 2010-2014, many farm operators

invested extra income into farm machinery upgrades, facilities, and land purchases; however, much more caution and analysis is required during these times of tighter profit margins.

7. Pay attention to family living expenses …… many farm families increased their level of family living during the higher profit years, but now may need to look for ways to scale-back the non-farm expenses.

8. Communication is key during difficult times…… sharing farm-related issues with

business partners, ag lenders, farm advisors, and family members is extremely important during challenging times.

185 pound carcass, negotiated price, weighted average

— 2015 — 2016

100 85

$53.85

70 55 40 25

$51.49 J

Source: USDA

Milk prices

Minimum prices, class 1 milk Dollars per hundredweight

— 2015 — 2016 25 22

$18.68

19 16

$18.51

13 10

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

Source: USDA

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

C. Sankey

MN Valley Business • january 2017 • 25

Minnesota Business Updates

■

■ Xcel big on vets Xcel Energy celebrated the achievement of 15 percent of new hires having a military background, exceeding the company’s goal of 10 percent, while doubling results from two years ago. “We appreciate the sacrifice that our veterans and their families have made to ensure the safety and security of our nation, and we are honored that so many of these women and men are part of our workforce,” Ben Fowke, chairman, president and CEO said in a statement. “Our military veterans bring leadership, teamwork, and dedication to the job, exactly the kind of skills we need to meet the energy needs of the future. As part of Xcel Energy’s efforts to hire veterans, it recently joined Veterans in Energy. This national organization is a recruiting network linking veterans to current job openings in the energy industry. Launched in October, Veterans in Energy is a partnership that includes energy companies nationwide along with the U.S. Departments of Energy, Defense, Labor and Veterans Affairs.

■ Bremer names CEO St. Paul-based Bremer Financial Corp. announced this week that its board of directors has unanimously chosen Jeanne Crain as the company’s next chief executive officer.

She succeeds Pat Donovan, who announced in July that he would retire at the end of 2016. Crain has been part of Bremer’s senior leadership team for four years. She most recently served as regional CEO of Bremer Bank Twin Cities. She was also group president for Bremer Financial Corp., overseeing the company’s financial services business, including Bremer Trust, Bremer Investment Services, Bremer Insurance and the two banking regions in North Dakota. Crain joined Bremer in May 2012 and has over 34 years of community banking experience. Crain will oversee an $11 billion financial services organization with 2,000 employees.

■ GGP earnings weaker General Growth Properties, which owns River Hills Mall, reported weaker-than-expected revenues for thirdquarter 2016. Its total revenues of $554.5 million not only fell short of the Zacks Consensus Estimate of $572.9 million, but also declined from the year-ago figure of around $585.3 million. Nevertheless, the company’s adjusted funds from operations per share of 35 cents came in line with estimates but narrowly missed the prior-year quarter figure of 36 cents. Same store net operating income increased 3.8 percent from the prior-year period, while same store leased percentage was 96.7 percent at the end of the

Employment/Unemployment Initial unemployment claims Nine-county Mankato region Major October Industry ‘15 ‘16 Construction Manufacturing Retail Services Total*

106 252 43 136 565

Local non-farm jobs Percent change ‘14-’15

141 130 43 156 469

+33.0% -48.2% 0% +14.7% +12.3%

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.

Minnesota initial unemployment claims Major Industry Construction Manufacturing Retail Services Total*

October

- 2015 - 2016

Nine-county Mankato region

127,328 129,660

133000 122000 111000 100000

Minnesota Local non-farm jobs

‘15

‘16

Percent change ‘14-’15

3,400 1,922 948 3,573 9,843

3,863 2,047 945 3,437 10,292

+13.6% +6.5% -0.5% -3.8% -4.6%

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.

26 • january 2017 • MN Valley Business

- 2015 - 2016

(in thousands)

2,911 2,879

3000 2000 1000 0

quarter. Initial rental rates for signed leases which started in the trailing 12 months (on a suite-to-suite basis), increased 12 percent. Further, tenant sales (all less anchors) expanded 1.4 percent on a trailing 12-month basis.

■ Chicken business sold Pork producer Maschhoff Family Foods, one of St. Louis’ largest private companies, has agreed to sell its Minnesota-based chicken business to giant chicken producer Pilgrim’s Pride for $350 million in cash. Maschhoff ’s sale of St. Cloud, Minnesota-based GNP Co., which supplies chicken products to retail, deli, food service and industrial customers under the Gold’n Plump and Just BARE brands, is expected to close in the first quarter of 2017. Pilgrim’s, which reported $8.2 billion in revenue last year, said the deal complements its existing geographic footprint and product offerings and will improve its technology and production capabilities. The company expects about $20 million in annual cost savings in purchasing, production and logistics, officials said.

■ Livestock plant open Valley Natural Foods has acquired 16 acres of land near Northfield and built a meat processing plant that will operate under the name Valley Natural Meats. The plant aims to meet demand of livestock producers in southern Minnesota counties.

Valley Natural Meats, a subsidiary of Valley Natural Foods, includes a fully organic, certified meat processing plant. The plant produces smoked and cured meats, hams and sausages. “In Minnesota, particularly the south central and southwestern areas of the state, direct-market producers are faced with a lack of local processing capacity,” said CEO Jason Harstad. The plant handles about 25 heads per day. They plan process deer and bison beginning in 2018.

■ U of M focuses on ag The CHS Foundation recently awarded a $3.44 million grant to the University of Minnesota for the transformation of agriculture education from kindergarten through higher education. The gift is the largest ever awarded by the CHS Foundation and will support a comprehensive approach to impacting agriculture education and rural communities across the country. Agriculture continues to face a growing shortfall of graduates in that sector versus available jobs. The U.S. Department of Agriculture estimates more than 20,000 agriculture jobs are left unfilled annually. Today there are approximately 30 jobs in the ag industry for every one qualified individual. The gift, and related programs funded by it, will develop strong leaders in rural America, engage youth in agriculture experiences and build a new agriculture education model.

Employment/Unemployment Local number of unemployed

- 2015 - 2016

Nine-county Mankato region

(includes all of Blue Earth and Nicollet Counties)

8000

3,747 3,970

6000

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

4000 2000 0

Mankato/North Mankato Metropolitan statistical area

2015

2016

2.4% 59,219 1,445

3.2% 57,772 1,495

Unemployment rates Counties, state, nation Minnesota number of unemployed

- 2015 - 2016

200000

89,793 95,510

150000 100000 50000 0

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

October 2015 2.5% 2.9% 3.3% 3.2% 2.9% 2.2% 3.1% 3.2% 3.8% 2.9% 3.0% 4.8%

October 2016 2.6% 3.2% 3.6% 3.3% 3.3% 2.4% 3.0% 3.5% 4.9% 3.1% 3.2% 4.7%

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

MN Valley Business • january 2017 • 27

On November 15, more than 500 members of the Greater Mankato community gathered to honor some of our region’s most outstanding businesses, organizations and professionals at the Greater Mankato Business Awards & Hall of Fame. Thank you to our members, the emcees and all the attendees for a memorable event. Please join us in congratulating all of this year’s award recipients! To view pictures and video from the event, as well as nominate a business, organization or professional for 2017, please go to: greatermankato.com/hall-fame. Thank you to our sponsors:

Presenting Sponsor:

Video Sponsor:

Dinner Sponsor:

GREATER MANKATO GROWTH AWARDS

Greater Mankato Growth

HALL OF FAME Dotson Iron Castings

The Hall of Fame Award honors an outstanding private sector business that has been in the region for more than ten years, for their contributions to our vibrant community. Contributions include: contributing to better the quality of life in Greater Mankato through the creation of quality jobs and developing opportunities for their employees; demonstrates personal and business ethical qualities, including dedication to family, community, the environment and private enterprise; demonstrates qualities of entrepreneurship by assuming the risk of organizing, developing and managing a successful private business enterprise in Greater Mankato.

28 • january 2017 • MN Valley Business

GREATER MANKATO GROWTH AWARDS YOUNG PROFESSIONAL OF THE YEAR Brad Boettcher

The Young Professional of the Year Award recognizes an individual between the ages of 21 and 40 who has made an outstanding contribution to the Greater Mankato community this past year.

HAP HALLIGAN LEADERSHIP AWARD Scott Wojcik

The purpose of the Hap Halligan Leadership Award is to recognize and honor an individual whose participation in the Leadership Institute of Greater Mankato program has helped provide an impetus for his/her outstanding creative or innovative contributions to the Greater Mankato community.

BRIAN FAZIO BUSINESS EDUCATION PARTNERSHIP AWARD Minnesota State University, Mankato Department of Dental Hygiene & Open Door Health Center

MN Valley Business • january 2017 • 29

Greater Mankato Growth

The Brian Fazio Business/Education Partnership Award was created to recognize partnerships that enhance education and business in Greater Mankato.

GREATER MANKATO GROWTH AWARDS ENTREPRENEURIAL BUSINESS AWARD Heather Fisher, Salvage Sisters

The Entrepreneurial Business Award honors an outstanding organization that has been in business in the Greater Mankato region for less than 3 years.

DISTINGUISHED BUSINESS AWARD Jenn Melby-Kelly, The Coffee Hag

The Distinguished Business Award honors an outstanding private sector business that has been in business in the Greater Mankato region for 3-10 years.

CITY CENTER PARTNERSHIP CITYDESIGN AWARDS

Greater Mankato Growth

City design awards annually recognize excellent architectural and design enhancements that elevate the perception of the City Center. CityDesign Awards, presented by the City Center Partnership, focus on the vitality of our community. There has been a tremendous investment of time and dollars into the City Center over the years. The high quality urban design and vibrancy has a resounding impact on talent recruitment and retention efforts. Business and community leaders have poured themselves into revitalized livability and expansion of the City Center and are stewards at the frontline of this incredible momentum, keeping the downtown heartbeat pounding with a purpose. That heartbeat is loud and strong…and the City Center Marketplace continues to see tremendous growth from year to year. So regardless if it’s indoors or out, public or private -- an urban design which connects people to a particular place is an important attribute of a vibrant downtown.

NEW CONSTRUCTION OVER $5,000,000 Ridley Tower, Tailwind Group

30 • january 2017 • MN Valley Business

NEW CONSTRUCTION OVER $5,000,000, MUNICIPAL

Verizon Wireless Center Expansion/ Performing Arts Center

CITY CENTER PARTNERSHIP CITYDESIGN AWARDS

RENOVATION $1,000,000 - $3,000,000 Bethlehem Lutheran Church

RENOVATION $500,000 - $1,000,000 Mankato Area Foundation Shared Spaces A Center for Nonprofit Collaboration

RENOVATION $500,000

PRESERVATION STEWARDSHIP Carnegie Art Center

WYSIWYG Juice Co.

Greater Mankato Growth

DOWNTOWN DETAIL Tractor Bull Sculpture

MN Valley Business • january 2017 • 31

CITYART “PEOPLE’S CHOICE” AWARD Stand For The Flag - Lee Leuning & Sherri Treeby

This Vietnam Veteran, standing on a curb saluting the American Flag, is a beautifully crafted, life-like bronze sculpture. Stand for the Flag depicts a veteran saluting the American flag during a parade as the honor guard approaches. With each step he takes, he’s reminded of how he lost his leg that horrible day near Da Nang. Being a true patriot, he clenches his teeth in an attempt to hold back tears and he snaps firmly to attention. This sculpture, a gift made possible from the numerous business and community sponsors, will be permanently installed in the City Center.

VISIT MANKATO AWARDS

Greater Mankato Growth

BRING IT HOME AWARD The Dam Store

This award recognizes an individual, group or organization that works along-side Visit Mankato to bring a significant event home to Greater Mankato.

32 • january 2017 • MN Valley Business

HOSPITALITY AWARD Mankato Symphony Orchestra

This award recognizes an individual, group or organization who has gone above and beyond to provide outstanding hospitality to the visitors of Greater Mankato or who has helped promote Greater Mankato as a great destination to visit.

Greater Mankato Growth MN Valley Business • january 2017 • 33

RENOWNED AND RENEWED: RTJ TURNS 25

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