Mnvalley 4 14 by Free Press Media

CEO Scott Sustacek at the site where Jordan Sands will begin mining silica sand. Photo by John Cross.

Digging in

Jordan Sands continues Coughlan tradition

Also in this issue • Joe Bluth, mediating conflict • Gag’s, 40 years of Rvs • INdiGO Organics, education focus

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F E A T U R E S April 2014 • Volume 6, Issue 7

The Coughlan family has long been involved in one of the city’s oldest industries – quarrying – and continues it with Jordan Sands.

Shelly Bartlett’s INdiGO Organic offers organic hair care and food products while offering advice and education for customers.

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MN Valley Business • April 2014 • 5

■ April 2014 • VOLUME 6, ISSUE 7 PUBLISHER James P. Santori EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Pete Steiner Kent Thiesse Tim Penny Heidi Sampson PHOTOGRAPHERS Pat Christman John Cross COVER PHOTO John Cross PAGE DESIGNER Christina Sankey ADVERTISING Ginny Bergerson MANAGER ADVERTISING sales Danny Creel Jen Wanderscheid 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.. 29 ■ Agriculture Outlook...................... 30 ■ Agribusiness trends..................... 31 ■ Job trends..................................... 32 ■ Retail trends................................. 33 ■ Greater Mankato Growth.............. 34 ■ Greater Mankato Growth Member Activities ....................... 36

6 • April 2014 • MN Valley Business

From the editor

By Joe Spear

Mankato connects to U.S. energy future

hen you consider the Mankato regional economy, you probably don’t automatically think of mining. Retail is everywhere. Manufacturing is visible. Wholesale trade has long had a foothold here. And the region is quickly becoming a distribution hub with the building of the Wal-Mart and Fed Ex distribution centers this year. But while mining may have flown under the radar, the Mankato area has long been the provider of some of the most notable building stone the world over. For decades, mining companies such as Vetter Stone and Coughlan Cos. have mined the recognizable Mankato-Kasota stone in the Minnesota River Valley around Mankato. But a couple of years ago, the Coughlan family decided to get out of the stone and building business and dig a bit deeper with the mining of silica sand beneath what has been the Coughlan stone quarry. They will break ground on their Jordan Sands facility this spring and be operating by the fall on about 70 acres and using 40 acres for processing. They’ll produce about half a million tons of silica sand a year and ship via rail to Texas, Colorado and Oklahoma. Once again, a Mankato area business will tap into a nationwide trend. Silica sand is used in the practice of fracking, a process of injecting sand into the ground where hard-to-reach deposits of oil and natural gas abound. The roundshaped, hard sand is put under tremendous pressure to open pathways for oil and gas to flow from the ground. The Mankato area will now have a tie to the sometimes volatile oil and gas industry. That connection may be a double-edged sword. The demand for oil and gas seems to be ever-increasing, but the prices also seem volatile. When oil and gas prices are high, a business like fracking and the demand for fracking sand will likely remain strong. But if the bottom falls out of prices, you

could see negative impacts on demand for local sand as well. Jordan Sands represents a diversifying of Mankato’s industrial base in a way that hasn’t happened before. While Jordan is not likely to be a major employer -- estimates are for about 25 employees -- the silica sand has a natural resource value that will bring dollars from outside the area to the local economy. Bob and Joe Coughlan and CEO Scott Sustacek had to answer public questions about water use and the environmental impact of their operation and they seem to have settled most of the issues. The site will monitor air quality every six days and we’re sure the public will keep up on those readings. Even so, there seems to be at least some positive political capital developing around fracking. President Barack Obama pointed out in his State of the Union address how natural gas can be a “bridge” to America’s energy future, noting how safe fracking can help increase the supply of natural gas, which has half the carbon emissions of coal. Experts say the short bridge of natural gas to get us to more renewable fuels that carry less carbon may be only five to 15 years. But it’s clear natural gas will likely be a huge player in not only keeping overall energy prices low, but supply a cleaner burning fuel for our electric production. As America aims for more energy independence, Mankato will become more than a footnote for the raw material the region provides to help produce the gas and oil to help keep American factories humming. Keeping the price of natural gas and oil relatively stable or low has nationwide economic impact that may reach beyond the sand plant off Third Avenue. MV Joe Spear is executive editor of Minnesota Valley Business. Contact him at 344-6382 or jspear@mankatofreepress.com

Local Business People/Company News

■

Casey, Bellig named partners in firm

Patrick J. Casey

Daniel J. Bellig

Farrish Johnson Law Office announced that attorneys Patrick J. Casey and Daniel J. Bellig recently made partner in the firm. Casey joined the firm in 2010. He focuses his practice on criminal defense, family law, and civil litigation, and assists Madelia City Attorney Bruce Young with criminal prosecution matters. In 2009, he was named the Patrick F. Moriarty Trial Attorney of the Year, an award given to a seasoned trial lawyer who tries difficult and highprofile cases, and who has extensive trial experience and client advocacy. Joining the firm as an attorney in 2008, Bellig practices in the areas of personal injury, wrongful death, appeals, medical malpractice, medical privacy, and vaccine injuries. He was named one of the Attorneys of the Year in 2011 and a Rising Star in 2012 and 2013 by Minnesota Lawyer. ■■■

Enventis earns Cloud Builder Specialization

Enventis announced it has achieved the Cisco Master Cloud Builder Specialization. This specialization recognizes Enventis as having the capabilities to build and deploy cloud-ready integrated infrastructures based on Cisco solutions and technology ecosystem partner cloud offerings across storage, virtualization, cloud management and virtual desktop. The Cisco Master Cloud Builder Specialization is granted to a specific group of partners that possess indepth technology and architecture skills. ■■■

on manufacturing, construction, real estate and not-forprofit organizations. He is a member of the American Institute of Certified Public Accountants and the Minnesota Society of CPAs. ■■■

Lime Valley earns awards

Lime Valley Advertising received five Service Industry Advertising Awards for communication excellence this year. It is the 10th year that the SIAA has recognized Lime Valley’s creative accomplishments in advertising. The SIAA is a national competition. This year judges reviewed over 1,700 entries from 500 agencies for execution, creativity, quality, consumer appeal and overall breakthrough. ■■■

Atwood Realty honored

CENTURY 21 Atwood Realty has received from the Century 21 Real Estate Corporation the Gold Medallion Award, given to offices based on their level of production. The office also received the Quality Service Pinnacle Award, which indicates earning this award two or more consecutive years. Deb Atwood and her team have been honored with the Centurion Team Award and Quality Service Team Award. Dan Thielges has earned the CENTURY 21 System’s Masters Ruby Award following his continuous sales success and also the Quality Service Pinnacle Producer Award. Peg Ganey, Ellen Gruhot and Trent VanOrt have been honored with the Multi-Million Dollar Producer Award and the Quality Service Pinnacle Producer Award. Jeff Kaul earned the Quality Service Producer Award. ■■■

Manthe attains license

Cristen Manthe, director of business development and marketing for Coldwell Banker Commercial Fisher Group, attained her real estate license. Manthe has been with the Fisher Group since 2012. ■■■

Boettcher earns advance tax designation

CliftonLarsonAllen announced that Brad Boettcher has earned his Masters in Taxation designation from the University of Tulsa. He is a tax manager at CliftonLarsonAllen with nine years of experience providing tax and consulting services to privately held businesses and their owners. Boettcher serves clients across many industries, with an emphasis

Eide Bailly elects board leaders

Eide Bailly’s board of directors elected Linda Koerselman as chair for 2014. Eide Bailly is a regional certified public accounting and business advisory firm. Koerselman is Eide Bailly’s director of financial institutions and partner-in-charge of the firm’s Mankato office. She is the first woman to be elected chair of the board. Koerselman has more than 30 years of experience in public accounting with an emphasis in financial institution taxation and consulting, closely held business and individual taxation and small business consulting.

MN Valley Business • April 2014 • 7

Easterday joins AmericInn

The AmericInn Hotel & Conference Center hired Doug Easterday as Front Desk Manager. He joins the AmericInn with four years of hospitality management experience. The AmericInn Hotel & Conference Center is an 80 room hotel featuring an attached meeting venue located near the MSU Campus. ■■■

Doug Easterday

Heintz employees honored

Laurie Danberry

Marsha Hawker

Jacki Standon

Mike Drysdale

Pattison receives designation

Brent Pattison of Northwestern Mutual – Mankato has been conferred his Chartered Financial Consultant designation from the American College.

Brent Pattison

Founded in 1927, the American College, based in Bryn Mawr, Pennsylvania, is the nation’s oldest and largest nontraditional institution for higher learning dedicated exclusively to the academic studies of life insurance and related financial services. ■■■

Enventis declares dividend

Enventis (formerly HickoryTech) announced its board of directors voted to declare a quarterly dividend of $0.15 per share of HickoryTech common stock. The $0.15 dividend is payable in the second quarter on June 5, 2014 to shareholders of record on May 15, 2014.

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.

8 • April 2014 • MN Valley Business

Chicago Region.

Heintz Toyota announced that Laurie Danberry received the 2013 Silver Level Sales Society Award from Toyota Motor Sales USA. This honor recognizes sales consultants that have sold more than 197 new Toyotas and demonstrated outstanding c u s t o m e r satisfaction performance. She has also been recognized for the Toyota S.T.A.R.S. Award, which means she is in the top 11 sales consultants in the

Marsha Hawker received the Bronze Level Sales Society Award for the fourth year. This honor recognizes those who’ve sold more than 132 new Toyotas and demonstrated outstanding customer satisfaction performance. Jacki Standon received the Comptroller’s Award for Excellence, Brett Jordan designed to recognize and reward Comptrollers who successfully prepare and transmit their dealership’s financial statement according to Toyota’s accounting standards. Mike Drysdale received the Customer Relations Award for Excellence. Brett Jordan received the Parts Award for Excellence for the fifth year.

■

Business and Industry Trends

Economy

Economy short of expectations

The U.S Bureau of Economic Analysis revised its estimate of GDP growth in the fourth quarter of 2013 downwards, from 3.2 percent to 2.4 percent. Consumer spending grew at a slower rate than initially reported, while businesses accumulated fewer inventories. Final sales growth (GDP excluding inventories) was revised down from 2.8 percent to 2.3 percent, slightly below the third quarter’s 2.5 percent growth rate. Additionally, the Federal Reserve Board reported that U.S. industrial production fell in January by 0.3 percent, after rising the same amount in December. Manufacturing and mining production fell by 0.8 percent and 0.9 percent, respectively, while utilities production rose by 4.1 percent. Similarly, both new housing starts and building permits fell in January from their December levels, according to the U.S. Census Bureau. Still, the ISM manufacturing index rose to 53.2 in February, up from 51.3 in January (values above 50 indicate expansion), which suggests weather may have played a role in the weaker numbers above. Forecast U.S. real GDP grows by 2.6 percent in 2014 and 3.2 percent in 2015. Even though forecast real GDP growth accelerates over the next two years, it is only in 2015 that GDP growth exceeds the economy’s average annual growth of 3 percent from 1990 through 2007. Forecast real disposable income increases 2.6 percent in 2014 and 3.6 percent in 2015. Total industrial production grows at 2.8 percent in 2014, and is projected to grow 4 percent in 2015.

■■■

Energy

Heating costs were way up

Average expenditures for U.S. households heating primarily with propane are expected to be 54 percent higher this winter (October-March) compared with last winter, while expenditures for homes using heating oil will be 7 percent higher, natural gas 10 percent higher, and electricity 5 percent higher, according to the Energy Information Administration. Persistently cold weather east of the Rocky Mountains drove up demand for all heating fuels, depleted inventories, and put pressure on prices. Propane prices experienced an especially high spike during several weeks in January and February. EIA’s current estimates for winter heating expenditures are significantly higher than the pre-winter forecasts in the October 2013 Short-Term Energy Outlook. U.S. average heating degree days were 13 percent higher than last winter (indicating colder weather) and 10 percent above the October through February 10-year average. The Northeast was 13 percent colder than last winter, the Midwest and South both 19 percent colder,

while the West was 5 percent warmer. The cold weather this winter had the greatest effect on propane prices, particularly for consumers in the Midwest. Cold temperatures have tightened supplies that were already low heading into the winter heating season. Residential propane prices in the Midwest rose from an average of $2.08 per gallon on December 2, to $4.20/gal on January 27; prices had fallen back to $2.78/gal as of March 3. Cold temperatures have continued to tighten heating oil supplies and helped drive up retail prices. Since the beginning of the year, distillate inventories in the Northeast (Petroleum Administration for Defense Districts 1A and 1B) have fallen by almost 6.9 million barrels to reach 18.3 million barrels on February 28, 6.4 million barrels below inventory levels for the same week in 2013. Weekly residential heating oil prices increased by $0.20/gal during January and have averaged near $4.24/gal since the beginning of February.

Renewable electricity to grow

Renewables used for electricity and heat generation will grow by about 0.9 percent in 2014. Hydropower is projected to decrease by 1.7 percent, while nonhydropower renewables rise by 2.4 percent. In 2015, renewables consumption for electric power and heat generation is projected to increase by 6 percent from 2014, as a 5 percent increase in hydropower is combined with a 6.6 percent increase in nonhydropower renewables. EIA estimates that wind power capacity will increase by 8.3 percent in 2014 to about 65 gigawatts by the end of the year and will increase 17.9 percent to total more than 77 GW at the end of 2015. Electricity generation from wind is projected to contribute 4.6 percent of total electricity generation in 2015. EIA expects continued robust growth in solar electricity generation, although the amount of utility-scale generation remains a small share of total U.S. generation at about 0.4% in 2015. While solar growth has historically been concentrated in customer-sited distributed generation installations, utilityscale solar capacity grew by 96 percent in 2013. EIA currently expects that utility-scale solar capacity will increase by approximately 52 percent between year-end 2013 and year-end 2015.

MN Valley Business • April 2014 • 9

Minnesota Business Updates

■

■ ADM exec gives up presidency Archer Daniels Midland said its chief executive officer will give up the title of president to the agribusiness company’s chief operating officer, effective immediately. Juan Luciano, who has been COO since 2011, will take on the role of president from Patricia Woertz, who had held the titles of CEO and president since 2006, according to a statement. Luciano will continue to be COO and to report to Woertz. ADM, one of the world’s top grain traders, suffered a blow last year when Australia rejected its bid to acquire grain handler GrainCorp Ltd. The acquisition was intended to increase ADM’s access to fast-growing market in Asia. Charges relating to the failed GrainCorp deal contributed to a 27-percent drop in ADM’s fourth-quarter profit, overshadowing strength in its corn processing and oilseeds businesses as lower crop prices boosted margins.

■ Best Buy bets on online The key question facing Best Buy is whether it can find the right balance between using cost savings to fund competitiveness and rewarding shareholders. One message from the fourth quarter results was that online retail is just as much of an opportunity as it is a threat for Best Buy. During the fourth quarter, BBY achieved 25.8 percent domestic online growth with about half of the orders picked up in store. The company notes that its online priorities for the next two years are enhancing search, tools, recommendations and information, improving the presentation of accessories and services, leverage the supply chain to continue to provide products in a timeline manner, and continue to re-engineer the eCommerce technology platform.

■ Canoe makers lose key product PolyOne Corp. is stopping production of Royalex sheet — the king of custom plastics for many canoe enthusiasts — leaving almost all hull thermoformers and many paddlers up the proverbial creek without a replacement material. The shortage is affecting several Minnesota and Midwest boat makers. A factory in Warsaw, Ind., that is the sole source for Royalex is closing this year along with five other former Spartech Corp. plants. Royalex has been used to make nearly indestructible multi-laminated ABS and vinyl canoes for at least 40 years. Nowadays about 50 models of canoes from big names in the business like Old Town and Wenonah are fashioned out of the material. Old Town experts are looking at plugging their pending product line void with a three-layer polyethylene canoe. Spokesman David Hadden said.

10 • April 2014 • MN Valley Business

Hadden is brand director for Johnson Outdoors Watercraft, which designs and manufactures several lines of kayaks in addition to the collection of Old Town canoes. Wenonah Vice President Bill Kueper said finding a replacement material for Royalex moved to the front burner for the Winona-based company’s research and development staff.

■ Ackman sells GGP shares Bill Ackman’s hedge fund Pershing Square Capital Management has sold the rest of its longstanding position in General Growth Properties. The shares were priced at $20.12. Pershing Square had already sold almost half of its GGP stake in the third quarter. This has been one of Ackman’s most successful investments ever, as he purchased shares below $1 a share.

■ Enventis reports 4th quarter results Enventis (HickoryTech) reported fourth quarter revenue of $46.2 million. Net income for the fourth quarter totaled $1.9 million, and earnings per share totaled $0.14 per diluted share. “For the quarter and full year we delivered strong fiber and data revenue growth, a key objective in our plan to expand fiber access networks and further diversify our company’s revenue stream,” said John Finke, president and chief executive officer. “More than three-fourths of our revenue is from business and broadband services and our Fiber and Data segment revenue is now larger than our Telecom Segment revenue, signifying Enventis’ strong position as a leading business and broadband provider. Looking forward, we are focused on increasing our profitability, growth in strategic business services and delivering the best customer experience through a unified brand.” Capital expenditures in the fourth quarter totaled $7.2 million, which is down from $11.5 million of capital expenditures in the fourth quarter 2012. Long-term debt and current maturities, including capitalized leases, totaled $135.2 million at Dec. 31, 2013. The 2013 debt balance represents a year-over-year decrease of $1.6 million as a result of operating cash flow applied to ongoing debt reduction.

■ 3M to sell parts of business 3M is working with Goldman Sachs Group Inc. to sell components of its electronics business that the industrial- and consumer-products maker has decided are underperforming, people with knowledge of the matter told Bloomberg. The business units collectively represent about $1

billion in sales, said one of the people. 3M will probably sell them piecemeal since there isn’t an obvious buyer for the entire group, the person said. The units could collectively fetch about $1 billion if buyers are found, another person said. 3M reported sales of $31 billion in 2013. Selling off the businesses reflects Chief Executive Officer Inge Thulin’s effort to push innovation throughout the company as it cuts costs and focuses on finding growth in health care, energy and aerospace. Since taking over at St. Paul, Minnesota-

based 3M in February 2012, Thulin has increased spending on research and development, realigned business units and identified underperforming businesses.

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MN Valley Business • April 2014 • 11

■

Business Commentary

By Tim Penny

Area communities find their strengths

oo often communities focus on what they don’t have. And it is true that many community leaders struggle due to insufficient funding, limited resources, and inadequate infrastructure. But it is also true that if communities were to dwell only on these deficits, it’s likely nothing would ever get done. This is why Southern Minnesota Initiative Foundation entrepreneurship and innovation. As part of the (SMIF) developed a program we call the Community designation, community leaders opened a business Growth Initiative (CGI). Our CGI process helps a city, a incubator-Red Wing Ignite. The project received an cluster of smaller cities, or a county to focus on what they additional $20,000 Incentive Grant from SMIF to help do have - their assets. with the costs of the incubator, aimed at attracting early The CGI involves an Asset-Based Community stage technology businesses to the community. Development model to identify a community’s strengths In Fairmont, SMIF’s facilitation assisted in creating an and resources. These assets include individual talent, Early Childhood Initiative (ECI). Established in 2003, the businesses, local schools, non-profit agencies, fraternal Fairmont ECI continues to be a very active group. They and civic associations, financial have joined forces with other institutions, physical, and more. youth organizations in the Our goal is to facilitate a Fairmont area to create their planning process, allowing each “The model aims to identify a own non-profit, Youth First, to community to identify what continue to raise funds and community’s strengths and makes it unique and then write grants. collectively strategize about The Fairmont ECI saw a need resources, including individual how to build on their to reach families with children indigenous assets in order to talent, businesses, local schools, ages 3-5 that might otherwise enhance community vitality. be overlooked. They created a non-profit agencies, fraternal and Currently, 51 communities in home visitor position to our 20-county region have gone civic associations, financial support those families and have through the CGI process with continued to fund it for several projects primarily focused on institutions, physical, and more.” years, in part through SMIF’s early childhood education or home visiting grant program. entrepreneurial activity. This The Fairmont team is also means, they have mapped their actively working on PreK-Grade community’s assets, identified a leadership team, sought 3 alignment effort with in their public and parochial public opinion for projects, which then leads to a $20,000 schools. The Fairmont ECI recently created a grant from SMIF to implement their highest-ranking Kindergarten summer camp for children entering project ideas. kindergarten with little or no preschool experience and We are excited about the many impactful projects that received an additional Incentive Grant from SMIF to help have resulted from our CGI work in area communities. fund the program. Last year the camp reached just over For example, in 2008 the city of Lanesboro went through 100 children, better preparing them for school and life. the CGI process with SMIF and identified tourism and These communities were able to take on local issues local foods resources as community assets. This led to the once they focused on the assets they already had. It is our development of a community-supported online experience that the leaders and citizens who take part in marketplace for local goods, which eventually became a the CGI and ECI process continue to come together to downtown store front. This past year, Lanesboro Local tackle concerns that arise locally. Every community in our was sold and is now a for-profit business, offering locally region has a unique set of challenges and assets-through grown and produced food, handmade crafts, and local art. our CGI and ECI programs, our aim is to empower Red Wing’s CGI focused on its entrepreneurs. citizens to discover and address both. Contact us to find Community leaders continue to expand upon the initial out what SMIF can help you do for your community. MV CGI grant that supported a phone app to link visitors with the community and a new nonprofit promoting the Tim Penny is president/CEO of the Red Wing bluffs. Southern Minnesota Initiative Foundation. Their work has now grown into numerous other 507-455-3215; timp@smifoundation.org projects. Red Wing is now a member of the US Ignite Partnership, which pilots ultra-high-speed broadband projects throughout the United States to spur

12 • April 2014 • MN Valley Business

MN Valley Business • April 2014 • 13

Scott Sustacek in the Holtmeier pit, which was chosen as the site of Jordan Sand’s dry plant because the incline will make the plant less intrusive.

Digging in

Coughlans ready to mine silica sand

By Tim Krohn | Photos by John Cross and Pat Christman

or many generations the Coughlan family has been involved in mining along the bluffs north of Mankato. The family ran Mankato Kasota Stone, taking out the buff-tone Kasota stone prized for use in buildings across the state and nation. But last July, after 128 years, following the economic downturn that slowed new construction, the family closed the stone quarry. Once

home to at least a half dozen companies mining Kasota stone, the closure left Mankato with only Vetter Stone. While the Coughlans are out of the stone quarry business, it didn’t mean they were ready to stop getting their hands dirty digging around in quarries. Since 2010, brothers Bob and Joe Coughlan, along with Scott Sustacek, have been exploring mining for silica sand in the old stone quarries – sand that has grown

Cover Story

14 • April 2014 • MN Valley Business

The jars of silica show the three sizes of sand that are used for different applications. in demand thanks to the expansion of domestic oil and gas production. The Coughlans formed Jordan Sands, naming Sustacek as CEO, to move ahead with the plan to mine about 70 acres and use 40 acres to process the sand. Brett Skilbred was brought in as director of project development and was deeply involved in the permitting process for the project. Skilbred has also been named, as an industry member, to a state task force whose mission is to study silica mining issues and make recommendations to state agencies and the Legislature. “It was an obvious next step. The quarry business is just in our blood,” Bob Coughlan said. “The demand for (silica) is increasing so we think it’s a good long-term business.” The family, through its Coughlan Cos., had long ago diversified into other lines of business, including financial and manufacturing and Capstone Press, a major publisher of children’s books and digital products.

Sustacek had a 21-year career with Nystrom Inc., a commercial building products manufacturer, serving as CEO since 2005. “Bob Coughlan and I have known each other seven years,” Sustacek said. “We met at a CEO roundtable we were members of and built our relationship from there. The Coughlans are very unique business people. I have a great deal of respect for them.” After a bruising battle to get the project approved by state regulators and by Lime Township and Mankato, Jordan Sands is poised to begin the next phase of the family’s mining heritage.

The perfect sand

Groundbreaking for the project is this spring with the plant to open in the fall, at which time it will employ 25 to 30 people. The sand operation will be in the existing Jefferson Quarry, which has long been used for extracting Kasota stone, used for building construction.

MN Valley Business • April 2014 • 15

Jordan Sands will mine silica from existing mines that long supplied Kasota stone for the Mankato Kasota Stone company.

The operation will consist of a wet operation adjacent to the mining site, west of County Road 5/Third Avenue, a dry plant on the east side of the highway and a rail loading site. “The wet plant washes the sand and takes out any impurities — clays or anything that might be in the sand. It does an initial sizing of the sand, then it goes through a slurry line to the dry plant,” Sustacek said. The washed and strained sand then sits to allow water to leach out, then it goes into a large industrial dryer that dries it and sizes it more precisely for different types of uses. Then the silica will be put either into a storage silo on site or onto a rail car. “We’ll be making three sizes initially. Size depends on what it’s being used for. The larger sand is for oil (drilling) and the smaller for natural gas,” Sustacek said. Minnesota is noted for the high quality of silica sand, which is very round grains and is very hard. “They’re perfect for hydraulic fracturing, which is done far underground, under great pressure,” Sustacek said. The Oneota Dolomite Formation near Mankato has historically been a source for cutting and extracting limestone blocks for building stones. Immediately below the Oneota Dolomite Formation lies the Jordan Sandstone Formation, a Cambrian Age sand deposit. There are several formations of sand deposits in the state, including the Jordan, Wonewoc, Mount Simon and

16 • April 2014 • MN Valley Business

St. Peter formations. The Wonewoc and Wisconsin deposits contain more clay but are easier to extract as they’re closer to the ground. The Jordan Sands Co. will be mining from the Jordan deposit. Coughlan said that up to a quarter of their business will be supplying sand for making glass bottles. “This is a nice clean, clear silica that doesn’t have a lot of iron deposits. It makes it nice for clear glass.” Jordan Sands will be extracting a half-million tons of sand a year, shipping most of it to Texas, Oklahoma and Colorado. Everything will be delivered by rail. The company is permitted for about 15 years of mining, but there are extensive silica deposits beyond what will be used in that time period. Long before “hydraulic fracking” became a common term, silica was, and still is, used in a variety of applications. “Silica is used in a lot of places. We’ll be developing other markets. Foundries like Dotson and others all over the country use it. It’s used in construction, it’s used in shingles,” Sustacek said. The sand is even used in golf course sand traps.

A long battle

When the initial plans for Jordan Sands were introduced for review and approval in Lime Township, just north of Mankato, a fierce statewide debate was under way about new silica operations planned in Minnesota, mostly among

Brett Skilbred, director of project development for Jordan Sands, gives a tour last summer of the quarry north of Mankato where the company will mine and process silica sand. the bluffs of southeastern Minnesota. Countless meetings, petitions, environmental reviews, letters to the editor and public hearings ensued before all of the permits were approved to allow Jordan Sands to move ahead. “I think we always felt we had a good project here and it just took longer to get everyone else to see the quality of the project. To see what we were doing and how we were going about it,” Sustacek said. “We’re pleased we went down that path because ultimately the project proved itself out with people. A lot of this just got caught up in the statewide issue. Coughlan said the longer-than-expected process made them ensure they would do everything to the highest standards. “It was a vigorous process, but I’m glad we went through it,” Coughlan said. “We learned how to do it right. I’ve seen where some folks in the industry take it very serious and others are more relaxed. You have to do it seriously, you have to be very professional.” Numerous concerns were aired about the project, from the idea of oil fracking itself (although fracking isn’t done in Minnesota), to increased truck traffic, concerns about water wells and the potential dangers from the tiny dust particles that can blow from a silica operation. The company said he has multiple approaches to keeping dust from causing problems. A dust-collection system inside the dry plant will trap dust there.

“Fugitive dust just blowing around (outside), we have a plan for that, too. What we’ll have to do on a constant basis is measure moisture content of the sand on our property. If it slips below a certain moisture content, we will add water. That level is in our contract,” Sustacek said. “Another thing is we voluntarily agreed to put airmonitoring systems at the borders of our property that will measure ambient air every six days. It’s reported to the state and Lime Township.” He said a few silica operations in the state have already been doing the air-monitoring systems, and so far there has been nothing recorded that indicates a danger of the dust getting off site. He said Jordan Sands will not be a huge user of water. “We’ll have an appropriations permit from the DNR that will show a large appropriation, but we’re really mostly just moving water on our site,” Sustacek said. “We move water from one area so we can mine there and that just stays in the system. We’re just moving water around the site.” Once sections of mine are exhausted, reclamation will begin. “There will be continuous reclamation. As we mine we will reclaim right behind what we do. There will be a lot of green space, open space. It could be used for housing, other industrial. There will be some decent-sized bodies of water.” He said they will borrow some reclamation ideas from

MN Valley Business • April 2014 • 17

nearby Unimin mining in Ottawa, which has long been mining silica sand and reclaiming the prairie. “Unimin has done things the right way and set a standard with the Kasota Prairie on how to do a great reclamation. So that is something we want to aspire to,” Sustacek said. Beth Proctor, a biology professor at Minnesota State University, a member of the Lime Valley Township Board and a nearby resident of Jordan Sands, was deeply involved in the permitting process for Jordan Sands. She said that from the start her goal wasn’t to block the project, as some others had hoped for. “My goal was to have it done safely. I think the whole state is wrestling with the issue of silica sand mining and processing.” She believes everyone had a fair say in the process leading up to the approval of Jordan Sands, even if not all are happy with the outcome. But she said important unknowns remain about silica mining. “From my perspective, the important issue is ground water and drinking water and what is the end result,” Proctor said. “The other concern is the air.” She said that while the state is taking a more serious look at those issues, findings are slow to come. “What’s frustrating is how slow things move at the state level. I think the process is working as well as can be expected given what we have going on on the state level,” she said.

Brett Skilbred (above) walks past Kasota Stone blocks that were cut and used for buildings, in this photo from last summer. Bob (left) and Jim Coughlan are the fourth generation to run Coughlan Cos. Bottom: Stone quarrying is one of the oldest industries in Mankato.

18 • April 2014 • MN Valley Business

Fracking debate continues

hile no fracking is done in Minnesota, the volatile issue is invariably tied to the mining of silica sand, which is vital to the fracking process. Fracking, or hydraulic fracturing, is the process of breaking up shale underneath the Earth’s surface to extract oil or natural gas supplies. A series of holes are drilled into the ground, which are then pumped with a silica/water/ chemical mixture to create a pressure that forces gas and oil out of fissures in the shale. The process allows for the extraction of oil and gas that wouldn’t otherwise be accessible. Those in the energy industry say the use of fracking allows the A typical fracking platform. country to become more energy independent, creates jobs and stimulates the economy. And they note the benefits of burning more natural gas, which is cleaner than burning coal for

powering electric plants and for other uses. Meanwhile, environmentalists and some public health officials and scientists argue the potential dangers of fracking outweigh the benefits. They argue there is not enough long-term research about the effects on underground water and that regulation of the industry is lacking, among other issues. As the fracking debate rages in states where it is being done, the debate over mining for silica sand spread to Minnesota in recent years, as more companies moved to extract silica from the bluffs in south central and southeastern Minnesota. With dozens of silica operations active or proposed, the Minnesota Pollution Control Agency is continuing to study and monitor them for potential health or environmental problems.

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Shelly Bartlett started INdiGO Orangics on the Madison Avenue hilltop in early 2012.

An Organic Focus INdiGO Organics aims at education

By Heidi Sampson | Photos by John Cross

ive years ago, Shelly Bartlett, owner of INdiGO Organic, started sourcing organic hair care products. After 30 years in the cosmetology industry, Bartlett realized that the hair care products she was using on her clients were creating an allergic reaction within her own body. “I was experiencing a lot of upper respiratory issues and anaphylactic shocks,” she said. “The allergy issues kept building and building. When I started to source for better organic products, I came across Intelligent Nutrients. I even went as far as driving to Minneapolis and buying a $29 bottle of hairspray and selling it for $29, just so I could have that organic product available.” In the spring of 2011, she went to Intelligent Nutrient’s headquarters hoping they might allow her to sell their products. After a few questions from a lady behind a counter, she waited for the results of a board meeting to decide if she could carry their organic product line. For 23 years prior, she had sold a different product line within a branch of the same company. It was to her benefit that

she’d already experienced much of their training, as well as an instructor’s license. “She came back out of that meeting and said, yes,” Bartlett said. “They would let me sell Intelligent Nutrients. I only had to purchase a couple of thousand dollars’ worth of product and receive four days’ of training at Horst Rechelbacher’s home.”

Profile

20 • April 2014 • MN Valley Business

Food-based, organic ingredients

In 1995, Horst M. Rechelbacher founded Intelligent Nutrients, a health and beauty products company that utilizes 100 percent food-based and organically certified ingredients. Rechelbacher launched Intelligent Nutrients with the mission that, “everything we put in and on our bodies must be nutritious and safe.” Horst also promoted the idea that businesses have the greatest responsibility to provide sustainability for all living species. Rechelbacher’s organic farm is solar, wind and geothermal powered, which is where he grows plant

INdiGO Organics features hair salon and spa services as well as organic food and product offerings. Right Bartlett sells Intelligent Nutrients products from a company founded in 1995 by Horst M. Rechelbacher. ingredients for Intelligent Nutrients products. Although Rechelbacher passed away this past February, his wife and daughter plan to continue his vision.

Four Days on an Organic Farm

In Rechelbacher’s home, Bartlett started off every morning with yoga, meditation, and walks across his 600 acre organic farm. “I kept calling my husband, Marvin, to say that what I feel right now is incredible,” she said. “If we could have a salon where people felt like this for even an hour that would be wonderful.” At one point during her stay, Bartlett went into the kitchen to talk with the Rechelbacher’s personal chef. She had wanted to thank her for the delicious meals. As she entered the kitchen, Shelly noticed the raw fruits and vegetables were all certified organic. “I remember thinking that there is a connection here for organic, health and wellness. That is how the grocery side of INdiGO Organic became a realization.” By the end of June 2011, Bartlett and her husband drove by the building that would become INdiGO Organic’s current location on Madison Avenue. After a complete renovation of the inside of the building, INdiGO Organic would open its doors in January 2012, to support Horst Rechelbacher’s mission, his vision, and his passion.

Organic Salon and Spa:

INdiGO Organic offers its customers a clean air salon with organic salon and spa services. The business also features USDA organic food items, health, beauty and lifestyle products. Intelligent Nutrients products are free of sulfates, parabens, silicones, ethyoxylates, PEG, pthalates and synthetic fragrances. Bartlett believes their customers need to take care of their inner bodies, as well as their outer beauty by using products that do not contain harmful chemicals and synthetic materials. On the first Monday of every month, INdiGO Organic offers “Feed the Mind Mondays,” an educational class that is free and open to the public. Class typically runs from 7-8 p.m. and seeks to connect people with knowledge, inspiration, and information for those desiring to make a

positive difference within their lives. Topics have ranged from traditional medicines of India, chiropractic care, acupuncture, an intuitive reader, nutrition and aroma therapy classes. “It’s for like-minded individuals,” Bartlett said. “We have an organic cup of coffee or tea, and share the knowledge.”

INdiGO Organic and Oncology

At the age of 59, Bartlett’s grandmother, received a positive diagnosis for colon cancer. At that time, Bartlett was a 25 year old woman beginning her career as a cosmologist. She immediately began attending all of her grandmother’s appointments as the two of them were very close. “I thought she was going to be here for a long time,” Bartlett said. “I didn’t realize that would be my first contact with oncology. Around five years ago, I began to realize that the perms, colors and chemical hair relaxers I was using, were all toxic. As a hair dresser, you are constantly inhaling it but if I can educate more people, maybe some of us won’t have to be exposed to it.” Cancer patients searching for an organic component to add to their medical treatments will find INdiGO Organic more than willing to assist them, as they mix eastern and western practices for a holistic approach to healing. Bartlett believes that knowledge of oncology is extremely crucial, as her hair designers and massage therapists have all received training regarding proper care for cancer patients. Bartlett has even registered for a course to be certified as Oncology Esthetics Provider. “My hair designers are aware of the danger,” she said. “There is a time that a cancer patient cannot be massaged. There is a time that they are not even supposed to be getting facials, waxes, manicures or pedicures. There are so many things that can cause infection during or even within a year or two after chemo has been completed. At INdiGO Organic, not one of our products contains something that a cancer patient would need to avoid or be concerned about.” The business is open Mon - Fri: 9 a.m. - 8 p.m.; Sat: 9 a.m. - 6 p.m. MV

MN Valley Business • April 2014 • 21

Joe Bluth inside the courtroom where he often works in the ‘early neutral evaluation’ system to try to avoid a protracted trial.

Joe Bluth: The art of mediation In search of Goldilocks solutions By Pete Steiner Photos by Pat Christman

nly the day before, Joe Bluth had spent five hours in a small room on the second floor of the Blue Earth County Justice Center, trying to resolve a child custody case. The Judge in the case had recommended the parties for E-N-E – an “early neutral evaluation” as it’s called, to try to avoid a protracted trial with its large costs, and possibly further emotional damage to family members involved. Thus the quarreling couple sat down with their attorneys and the E-N-E team – a psychologist, a social worker, a retired judge,

and attorney Bluth as a qualified neutral party - all trying to massage an agreement out of court that could be acceptable and beneficial to all. For his services, the County paid Bluth a flat $300 fee – a pretty good wage for most folks, but a fraction of what he once commanded as one of this area’s best-paid trial lawyers. There was a time when Bluth was not a believer in third party mediation. As a harddriving litigator, he thought the process a bit “polly-anna-ish”. “I love trials – that’s the juice!” he still said. “Standing in front of a jury

Spotlight

22 • April 2014 • MN Valley Business

is the most exciting thing you can do.” Still, early on, though he may not have recognized it then, he was learning the value of working things out without being adversarial. Born in East St. Paul, the now-64-year-old Bluth ended up serving one-and-a-half tours in Vietnam. As a paratrooper, he became embedded with a small group working with Vietnamese civilians with whom he had to negotiate. And then there was the time early in his law career, after he graduated from Hamline, when he found himself dealing with two Amish farmers in Long Prairie. One wanted to sue the other because he had let his mare, who was in heat, wander, tempting the other’s stallion to jump a fence. In the heat of equine passion on a county road, the two horses were hit by a car – injured, but not killed. Bluth told the farmer, it wasn’t a case fit for court, and a trial would cost more than he could ever get out of it. So they settled. That might have been his first actual mediation, although he didn’t necessarily call it that. “When I was in law school [in the’70’s] it wasn’t really part of the discussion. Now most law schools offer mediation as a core concentration. For family law, I think it works.”

Mediation increasingly popular

In fact, mediation as a form of alternative dispute resolution has grown tremendously over the last two decades. It is practiced by a number of local attorneys, including Bluth, as a recognized specialty. It’s used most often in cases pertaining to family law, and also, increasingly, to resolve medical malpractice cases. Bluth’s transition to full-time mediation was hastened by some serious medical issues six or seven years ago that forced him to rethink the high stress and obvious physical demands of courtroom trials. He plunged into training for his new specialty, learning in the process that there are several styles of mediation. “Facilitative” is the most established style, in which the mediator sets up a process to help the adversaries find, as Zena Zumeta puts it at Mediate-dot-com, “a mutually agreeable resolution. The mediator…assists the parties in … analyzing options for resolution [but] does not make recommendations.” Bluth describes a typical facilitative exchange as, “I hear what you’re saying, but should you also consider…? You try,” he continues, “to get the separate parties to come up with THEIR OWN solution.” In a custody case, he’ll sometimes ask the warring parents to put a picture of their child on the table in the middle of the room, and ask them to look through the child’s eyes, as a judge often does. “Evaluative mediation” allows the mediator to make recommendations. In that case, the parties may be sequestered in separate rooms, with Bluth shuttling back and forth. He may actually say, “I think this is what’s best…,” taking into account what a judge might conclude on the facts. He could even go so far as specific suggestions for a settlement document. If the process seems tedious, Bluth points out, it’s much faster than going to trial, which can drag on for up to six months – even years, if there’s a

simultaneous criminal issue like sexual abuse. And then there’s cost. Even in the Mankato area, a bitterly contested divorce that goes to trial can conceivably run to $50,000 or even $100,000. Says Bluth, “the alternative to settlement is so much more costly and often devastating.” Plus, he says, at trial, there’s always the chance you will LOSE. There’s a third approach to mediation, newer, not used as often, but one Bluth finds intriguing, called “Transformative.” He describes it as an “almost Buddhistlike” process of seeking awareness. He says he is comfortable with this style, in which the mediator is almost “like a psychologist,” frequently probing with questions like, “What do you mean when you say…? We try to guide them into hearing each other.”

Getting it just right

Recalling his courtroom days, Bluth allows a slight smile describing his style: “I could be tenacious.” He says he had to convince some of his legal colleagues that his approach had changed as a mediator, but “the civility factor here [among attorneys] is high.” In the end, he says, “everybody wants to move away from pain and toward pleasure.” As a trial lawyer, success was winning the case. Now, “either getting the parties to a solution they can actually live with, or at least getting them to seek resources…” – that’s a win in this complicated game of being human. “It’s like Goldilocks,” he grins, you want what is just right.

A virtual office

For Bluth, the familiar “I’ll see you in court!” has been replaced by, “Let’s see if we can avoid that.” Gone is the comfortable, well-appointed office in the brick building on Broad Street, replaced by a virtual office that can be set up almost anywhere. He does four to six mediations a month, and two to four E-N-E’s. Mediation can run up to $200 an hour, still well short of what he made as a trial lawyer. But from the perspective of the parties involved, one or two or even three days at that rate is far less punishing financially and emotionally than a six-month trial court proceeding. Bluth insists, “This keeps me happy.” MV

MN Valley Business • April 2014 • 23

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24 • April 2014 • MN Valley Business

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Larry and Irene Gag started the business, with Larry’s son Dan joining full-time in 1999.

Four decades serving RVers Gag’s offers small to lavish campers By Heidi Sampson Photos by John Cross

or the first three years, beginning in March of 1972, Gag’s Camper Way operated out of a mobile home where Larry Gag and his wife, Irene, also lived near Hiniker Pond. Larry was the only full-time employee with Irene working on more of a part-time basis as a bookkeeper for their company while their children were young. Once their children started school, Irene became a full-time employee. In 1975, Larry began construction on a new building just off of Highway 169. By that fall,

his company had moved to their new location leaving behind his makeshift mobile home operation. Larry added an indoor service area to the back of his building explicitly for the service of campers, in 1978. The expansion allowed for the accommodation of up to 12 campers. Larry was also able to hire two salesmen and three service specialists after the building was completed. In the early ’80s Dan Gag, Larry’s son, began working for the company after school and on weekends as a teenager. He primarily helped to

All In The Family

26 • April 2014 • MN Valley Business

Technician Chad Lachmiller checks out the gas system of a new RV. clean campers. Larry became a full-time employee, in 1999. Today, Dan and Larry operate Gag’s Camper Way within a co-ownership capacity. Dan oversees the operation of the business while Larry and Irene are transitioning into retirement. Currently, their two main camper lines are Kaycee and Jayco. “We have 15-foot trail trailers all the way to 40-plus-foot park models,” said Dan. MVB: Have fuel prices affected camper sales? Dan: I think the stigma of it has somewhat worn off by now. It is a lot more expensive but it is steady and we know to expect it. What it has done is change a little bit of the direction in what people are doing and buying. We may not be selling as many 35-footers. Instead, we sell more of the shorter lighter weight campers. We’ve seen the migration from big trailers towed all across the country, to smaller trailers, to the big trailers that get towed to one location and left there. Larry: Even with fuel prices, I believe camping is still more economical efficient versus staying in a hotel. MVB: What’s the biggest asset of your business? Larry: There are so many. I don’t want to pick just one. We have great employees who are dedicated. They make it happen. Our physical location is important. We are on a highway and we’ve been here for almost 40 years. But I think it is our complete organization that makes us special. Over a long period of time we’ve put together a big operation that includes a bunch of different elements. It’s difficult to break it apart and say this is more important than anything else. I see the business as a giant puzzle and all the pieces have to fit. Larry: We also treat our customer’s right. We’ve always taken care of the customer. I also think having a good supply of inventory for people to choose from is important. MVB: How do you handle the competition of the market?

Dan: Competition is competition whether that is another RV dealer or someone who’s buying a boat, lake cabin, or going on a cruise. We all have different ways of taking a vacation. What we offer is a lifestyle choice for people who want to go camping. Jayco’s been in business since 1968. Kaycee’s been around since 1972. Jayco and Kaycee offer a two year warranty, these manufactures stand behind their product longer than many other companies. Larry: We also stay competitive in terms price and selection. Right now, Jayco is one of the top selling brands in the country. I believe Jayco has an established longevity our customers can trust. MVB: What is your approach to customer service? Dan: When a customer has an issue, we want to resolve that and take care of the problem as fast as we can. The camper has to be working when the customer wants to use it. One of the big things we do when a camper is purchased from us, we’ve already been with that camper on two different occasions. The first occasion, we call the PreDelivery Inspection Level One. This is when we receive the camper from the factory. We will go through it to make sure everything is working. We want to make sure that the factory didn’t miss a step. We’d rather catch a potential problem in our shop versus having a customer catch the problem in the campground. Once the customer buys the camper from us, before they’ve taken possession, we complete what’s called the Pre-Delivery Inspection Level Two process. During this step, we make sure that all of the major systems are still working the way they are supposed to. At this time, we will install a battery, fill LP tanks, and provide a sewer hose, all the little things you are going to need in order to make the camper work. The day you pick up the camper, we spend as much time as it takes with the customer to make sure they are comfortable with the systems. Some customers, who are on their fourth or fifth camper, are done in 15 minutes. First time buyers, we can spend up to two hours with them making sure they are comfortable with how their refrigerator and water heater work. While a camper has all of the appliances that a house has, they are still a little bit different in how they operate. I believe there is a lot of customer service built in after the sale but there is also a lot of customer service built in before the sale, so our customers won’t have those comeback issues. Hours: Monday through Friday 9-5; Sat 9-3.

MN Valley Business • April 2014 • 27

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28 • April 2014 • MN Valley Business

Construction/Real Estate Residential building permits Mankato 8000

(in thousands)

- 2013 - 2014

- 2013 - 2014 (in thousands)

3000

$220

6000

Residential building permits North Mankato

$918

2000

$496

4000

1000

2000 0

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

- 2013 - 2014

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

- 2013 - 2014

50 J

Source: Realtors Association of Southern Minnesota

Source: Cities of Mankato/North Mankato

Commercial building permits Mankato

(in thousands)

- 2013 - 2014

Commercial building permits North Mankato

- 2013 - 2014 (in thousands)

2000

1500

$760

1000

$891

500 M

Source: City of Mankato

— 2013 — 2014

5.5 5.0

4.3%

4.5 4.0

3.4%

3.5 J

Source: Freddie Mac

Source: City of North Mankato

Interest Rates: 30-year fixed-rate mortgage

3.0

100

20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0

Housing starts: Mankato/North Mankato

150

112

200

Source: City of North Mankato

Existing home sales: Mankato region 250

Foreclosures: Third Quarter of 2013 County Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan

2012

2013

Percent change

24 11 14 23 12 13 13 11 6

19 6 7 22 6 18 8 7 4

-21% -45% -50% -4% -50% +38% -38% -36% -33%

Source: Minnesota Foreclosure Partners Council C. Sankey

MN Valley Business • April 2014 • 29

■

Agricultural Outlook

By Kent Thiesse

Ag Census shows fewer farms, older farmers

very five years, the United States Department of Agriculture (USDA) conducts a “Census of Agriculture” in order to count the number of farms and ranches in the U.S., and the number of people who operate them. The Ag Census data looks at land use and ownership, operator characteristics, production practices, farm income, and other characteristics. The census provides national, state and county data. The initial results of the 2012 Census of Agriculture were recently released. The census showed a decrease in total farm numbers, with a lot of variation relative to farm size and scope, as well as increases in the number of minority farm operators, large increases in total farm sales, and many other interesting trends. It should be noted that the 2012 Ag Census was not conducted in a typical ag production year, as a major drought affected both crop and livestock production levels and prices in 2012. Following is a summary of some of the highlights.

Mid-sized farm numbers down The 2012 Ag Census listed a total of 2,109,363 farms in the U.S., which is a decrease of 4.3 percent or 95,429 farms since 2007. Overall, U.S. farm numbers have generally been declining since World War II; however, numbers have been more stable since 1992. The number larger farms (1,000 acres or more), and the number of very small farms (less than 10 acres) in the U.S. did not change significantly from 2007 to 2012; however, the number of mid-sized farms declined at higher rates during the five year period. The total amount of land in farms in the U.S. declined from 922 million acres in 2007 to 915 million acres in 2012, representing a decline of less than one percent, which was the third smallest decline since 1950. The average U.S. farm size in 2012 was 434 acres, which is a 3.8 percent increase over the average farm size of 418 acres in 2007.

In 2012, Minnesota had a total of 74,537 farms, and just over 26 million acres in farms, which compares to 80,992 farms and nearly 27 million acres in 2007. The average farm size in Minnesota was 349 acres in 2012, compared to 332 acres in 2007, with 6,262 farms being 1,000 acres or more in 2012, which was a slight increase. Minnesota was similar to the national trends with the number of mid-sized farms declining at higher rates. 5,393 farms in Minnesota had total ag sales of $1 million or more in 2012, which is nearly double the number of farms at that level in 2007 Farm characteristics About 1.82 million farms (86%) were operated by males, and just over 288,000 farms (14%) operated by females. In 2012, approximately 92 percent of the farm operators in the U.S. were White, while about 8 percent were from various minority classes; however, from 2007 to 2012 there was a 21 percent increase in the number of Hispanic farmers, as well as gains in the number of Black, Asian and American Indian farm operators. 75 percent of all farms had total sales of less than $50,000 in 2012; however, more than 90 percent of the Black, American Indian, and female farm operators were under that level. Only 65 percent of Asian farm operators were below $50,000 in annual sales. The average age of U.S. farm operators in 2012 was 58.3 years old, which was up from 57.1 years old in 2007, and continues a 30-year trend of an increasing average age of U.S. farm operators. The number of farm operators over 65 years old grew significantly from 2002 to 2007, while the number of operators under 35 years old remained steady. About 1 million farm operators (48%) reported farming as their primary occupation and source of family income in 2012, which was an

30 • April 2014 • MN Valley Business

increase of about 3 percent from 2007. In 2012, there were 469,138 U.S. farm operators with under 10 years of experience, which was 20 percent less than 2007. About 172,000 had less than five years on the farm. Farm Comparisons In 2012, the market values of crops, livestock, and total agricultural products were each at record highs, which resulted in a total of $394.6 billion in agricultural sales on U.S. farms, which is an increase of 32.8 percent from the 2007 ag sales level of $297.2 billion. Crop sales in 2012 totaled $212.4 billion, which was an increase of 48 percent over the 2007 level, while total livestock sales in 2012 were $182.2 billion, representing an increase of 19 percent above 2007 sales. 2012 was only second time in the history of the ag census (since 1840) that total U.S. crop sales have exceeded total livestock sales. The other time was in 1974. The average agricultural sales per farm in 2012 was $187,093, which compares to $134,807 in 2007, an increase of 38.7 percent. Total government farm program payments were $8.1 billion in 2012, which is nearly the same as the 2007 level, and represents just 2 percent of the total farm sales. The total payments include the conservation reserve program (CRP) payments paid to landowners. The number of farms with total sales above $1 million per year increased by 42.5 percent from 2007 to 2012, increasing from 57,292 farms to 81,634 farms; however, 1.6 million farms (75%), had total sales of less than $50,000 annually. State Comparisons From 2007 to 2012, the total number of farms decreased in 34 states, and increased in only 16 states, with the significant farm number decreases in some midwestern states, including Minnesota and Wisconsin.

Agriculture/Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2013 — 2014 8 6

16 12

$13.29

$4.31

Source: USDA

Iowa-Minnesota hog prices

Source: USDA

$119.15

$74.66 M

Minimum prices, class 1 milk Dollars per hundredweight

$23.18

— 2013 — 2014 24

108 96

Milk prices

185 pound carcass, negotiated price, weighted average

— 2013 — 2014 120

(dollars per bushel)

— 2013 — 2014 20 $14.33

$7.30

Soybean prices — southern Minnesota

Source: USDA

$20.01 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.

The total land in farms also decreased in 31 states and increased in 19 states from 2007 to 2012, with ten states having increases in both farm numbers and amount of land in farms. Minnesota ranked ninth in total farm numbers in 2012, with the top five states being Texas, Missouri, Iowa, Oklahoma, and California. Minnesota ranked fifth in total agricultural sales in 2012, trailing only California, Iowa, Texas, and Nebraska. Minnesota ranked seventh in total ag sales in 2007. Minnesota ranked fourth in crop sales behind California, Iowa, and Illinois, and ranked seventh in livestock sales, with Texas, Iowa, and California being the leading states. MV

C. Sankey

W W W. U M M C . C O

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

Asphalt Paving Award, Fairmont Airport

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(507) 625-4171 | www.bolton-menk.com MN Valley Business • April 2014 • 31

Employment/Unemployment Initial unemployment claims

Minnesota initial unemployment claims

Nine-county Mankato region Major February Industry ‘13 ‘14 Construction Manufacturing Retail Services Total*

208 257 62 163 690

Percent change ‘13-’14

243 167 45 201 656

+16.8% -35% -27.4% +23.3% -5%

Major Industry

February ‘13 ‘14

Construction Manufacturing Retail Services Total*

4,197 2,429 1,453 5,640 13,719

Percent change ‘13-’14

4,766 2,519 1,391 5,196 13,872

+13.6% +3.7% -4.3% -8% +1.1%

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

- 2013 - 2014

Nine-county Mankato region 123,646

30000 20000

2000

10000

1000

00000

Local number of unemployed

- 2013 - 2014

Nine-county Mankato region 9,087 7,647

10000

Minnesota number of unemployed

- 2013 - 2014

199,406

200000

8000

167,814

150000

6000

100000

4000

50000

2000 0

2,765.1 2,799.6

3000

123,808

- 2013 - 2014

(in thousands)

Mankato/North Mankato Metropolitan statistical area

Unemployment rate Number of non-farm jobs Number of unemployed

2013

2014

5.5% 55,188 3,226

4.4% 56,327 2,599

Source: Minnesota Department of Employment and Economic Development

32 • April 2014 • MN Valley Business

Unemployment rates Counties, state, nation

(includes all of Blue Earth and Nicollet Counties) January

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

January 2013 5.6% 7.7% 7.2% 9.7% 6.5% 5.3% 6.4% 7.4% 7.8% 6.0% 6.6% 8.7%

January 2014 4.5% 6.3% 7.6% 8.6% 6.0% 4.2% 6.1% 6.6% 7.1% 5.1% 5.7% 7.0% C. Sankey

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2012 - 2013 702

1200 1000

(In thousands)

- 2012 - 2013

500

$430.8 $395.3

400

671

800

300

600

200

400

100

200 0

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

Sales tax collections Mankato

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato $41,556

60000

Mankato food and beverage tax

- 2012 - 2013

75000

$52,702

$47,073

50000

Source: Sales tax figures, City of Mankato

$55,169 50000

40000 30000

25000

20000 10000 0

Source: City of Mankato

Gas prices-Mankato — 2013 — 2014

Stocks of local interest

Feb. 14

March 17

Percent change

Archer Daniels

$40.78

$42.85

+5.1

Ameriprise

$107.99

$109.44

+1.3

Best Buy

$24.78

$25.85

+4.3

Crown Cork & Seal

$44.25

$44.72

Fastenal

$44.98

$49.99

+11.1

General Growth

21.92

$22.28

+1.6

General Mills

$49.89

$50.58

+1.4

HickoryTech

$14.22

$13.05

-8.2

Hutchinson Technology

$3.64

$3.08

-15.4

Itron

$36.12

$35.58

-1.5

Johnson Outdoors

$23.04

$24.48

+6.3

$132.12

$132.57

+0.3

Target

56.06

$59.76

+6.6

U.S. Bancorp

$40.79

$42.24

+3.6

Wells Financial

$22.90

$22.95

+0.2

$.55

$.50

-10

$29.65

$30.39

+2.5

$3.74

$3.57

2 1 0

Gas prices-Minnesota — 2013 — 2014

$3.25

4 3 2

$2.95

1 0

Winland Xcel

Source: GasBuddy.com C. Sankey

MN Valley Business • April 2014 • 33

Advancing Business for a Stronger Community

Greater Mankato Growth, Inc. Honors

VOLUNTEER OF THE YEAR Award Recipients

Greater Mankato Growth, Inc. honored their Volunteer of the Year award recipients for 2013 during their recent annual meeting. This year’s recipients were: Greater Mankato Growth, Jesse Schott;Visit Mankato, Joe DeLory and City Center Partnership, Malda Farnham. Each of these individuals have made an outstanding contribution to their respective organization, demonstrated leadership through service and volunteerism and made a contribution to the betterment of quality of life, business environment and economic vitality. More than 350 attendees were present during the annual meeting

Greater Mankato Growth

GREATER MANKATO GROWTH Since the Greater Mankato Young Professionals inception in 2008, Greater Mankato Growth

City Center Partnership Board of Governors Chair Stacey Straka presented Malda Farnham with her award.

34 April 2014 Valley Business 1 •• JANUARY 2013• •MN MN Valley Business

Volunteer of the Year Jesse Schott (a construction administrator for I&S Group) has made a tremendous contribution to the Young Professionals. Schott has contributed his leadership skills as well as an abundance of time and effort through chairing the Kiwanis Holiday Lights Parade in 2012 and 2013, he was a major factor contributing to the overall success of this popular event. He also served as the Young Professionals Community Service Chair, where he helped to gain more participants., expand events and provice more opportunities for members to participate in. Schott also was a participant in the Young Professionals New Member Committee. He volunteers through the Young Professionals for the CityArt installation and removal, BackPack Food Program and Rake the Town.

ing

2013 Volunteer of the Year Awards Recipients (from L to R): Jesse Schott, Joe DeLory and Malda Farnham

CITY CENTER PARTNERSHIP City Center Partnership Volunteer of the Year, Malda

Farnham, has made a huge impact on the vitality and livability of the City Center while supporting many of their efforts. Farnham single-handedly organized and managed the Adopt-a-Planter program through the City Center Partnership. This project was started four years ago when Farnham found 10 businesses on North Riverfront Drive that agreed to maintain large floral planters in front of their establishments. The project was a great success and has grown since. She continues to support this project, keeping an eye on the planters and occasionally pulling a few weeds. The annual meeting also highlighted the organizations 2013 milestones and 2014 plans as well as recognizing outgoing and incoming board members. GMG also premiered a marketplace video done in correlation with Studio 12 - a Divison of KEYC-TV.

MN Valley Business • April 2014 • 35

Greater Mankato Growth

VISIT MANKATO Visit Mankato Volunteer of the Year, Joe DeLory or “Biken Joe”, has been active with the organization for several years. Since the Mankato Marathon’s inception, he has volunteered to lead both the 5K and KidsK events on bike. He put his EMT training to good use with coordinating and recruiting a team of doctors, nurses, medics and first responders on bicycles. Logging nearly 100 miles the weekend of the marathon, DeLory ensured that all runners were safe and motivated. He also volunteers as a course ride marshal (patrol) for the River Ramble. DeLory has been a strong promoter of Greater Mankato’s healthy active lifestyle and natural beauty – when paddling on the river, he even collects debris to keep the water clean.

Calling all Business Leaders, Entreprenuers and more!

THE EVENT FEATURES: •

More than 70 speakers including national experts, local business owners, economists, and resource providers

• The first Southern Minnesota Economic Summit – the local summit for southern Minnesota business and economic stakeholders, will be held April 29 – 30 at the Verizon Wireless Center in Mankato. Join Greater Mankato Growth, Southern Minnesota Initiative Foundation, AgStar Financial Services and RCEF to • connect with business leaders, economic experts, regional resources and industry specialists. This event is ideal for everyone, from the practiced business owner to the emerging entrepreneur.

Keynote presenters from the U.S. Department of Commerce, State Economist of Minnesota, Federal Reserve Bank of Minneapolis, executives from southern Minnesota businesses, and Nead Inspiration

April 29 - 30

•

Southern Minnesota Business Showcase presented by Center for Business & Industry, a Division of South Central College - Regional networking opportunity which includes business booth expo, designer lounge spaces, and food Entrepreneurial Bridge - provides entrepreneurs

Registration: $139 or $109 for members of (from the novice to the seasoned) with practical partnering chambers of commerce SOUTHERN MINNESOTA resources for building financial support, education and partnerships

economic-summit.com SOUTHERN MINNESOTA

•

BizPitch - a forum for entrepreneurs and those in early stage business, to present their ideas and concepts to a panel of business leaders to get instant and constructive feedback

Worldwide Leadership Event May 9

Greater Mankato Growth

Join Greater Mankato Growth as they host Leadercast Greater Mankato on Friday, May 9 at South Central College. This one day event will be simulcast to more than 600 communities in 40 countries and will feature nationally-recognized speakers including Archbishop Desmond Tutu and Laura Bush. This is a fantastic opportunity for area businesses and their employees to become energized and motivated as they hear the unique leadership stories of each speaker. Here’s what attendees from last year had to say: “The nationally recognized speakers helped reinforce key leadership ideas that can easily be forgotten in our fast-paced and sometimes complex routines.” Nathan Hanel, Customer Service Supervior at Capstone “This seminar changed my business outlook and I returned to my office with a positive attitude and excited to share the information with my co-workers.” Beth Fasnacht, Interior Designer at Brunton Architects & Engineers Cost to attend is $109 per person and includes lunch. If your business is a member of Greater Mankato Growth, register by April 15 to receive a $20 discount. Register online at greatermankato.com/leadercast.

36 April 2014 Valley Business 1 •• JANUARY 2013• •MN MN Valley Business