Mnvalley 6 17 by Free Press Media

The Definitive Business Journal for the Greater Minnesota River Valley June 2017

Scott Fee in Old Town Mankato where he has focused on collaborative real estate deals. Photo by Pat Christman

Steady, but challenging Real estate markets mixed Also in this issue • ANN MARIE’S KITCHEN IN WINNEBAGO • STICKS AND STONES IN MANKATO • BERGER INTERIORS OF ST. PETER

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RENTAL PROPERTY PURCHASING TIPS Owning a home presents its challenges at times, yet some people enjoy owning several. They like being a landlord—finding renters, fixing the plumbing, collecting rent checks, etc. They perceive the economics of owning a rental property outweighing the necessary time commitment.

Other tax opportunities •

Depreciation: Accelerating the deduction into early years can improve cash flow and take advantage of the time value of money. Depending on the size of the project, you could have a study completed that would further accelerate your depreciation by allocating project costs to shorter recovery periods (i.e 5, 7 or 15 years versus the normal 27.5 or 39 years for a building).

•

Credits: Tax credits are another powerful strategy. They provide a dollar-for-dollar offset to your tax liability. Some of the more common credits within real estate rentals include the New Market, Historic Preservation, or Rehabilitation Tax Credits. Each have unique qualification requirements and are worth exploring.

If you’re thinking of purchasing your first rental property or adding to your portfolio, here are some things to consider. Tax losses: I can deduct them, right? Possibly—with proper planning and structuring. Taxpayers with gross income below $150,000 can deduct up to $25,000 of passive rental losses if they can show material participation (without getting into the details, think hours dedicated to the running and maintaining the property). Real estate professionals (must meet specific requirements) are viewed as actively involved in the industry and are able to deduct rental losses.

In addition to tax considerations, financing packages, cash flow projections, vacancy expectations, capital improvements and/or major repair budgets should also be considered with your team of advisors. Consult your banking, realtor and tax professionals before entering into or expanding your presence in the (sometimes) entertaining world of landlords.

By: Dean Portner, Partner, CPA Dean serves clients in construction, manufacturing, service and leasing. He’s involved with local groups, too, like the North Mankato Rotary Club, Minnesota River Builders Association, Construction Finance Management Association, and he frequently attends Greater Mankato Growth “Business Before and After Hours” events.

Contact at 507.386.6280 or dportner@eidebailly.com.

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The existing home sales market continues to see strong demand but is plagued by an ongoing low stock of homes for sale and too few new homes being built. Meanwhile, the commercial real estate market is healthy but faces a lot of vacancies in industrial and big retail spaces.

Kevin and Cindy Berger started with a flooring business in Belle Plaine that expanded to furniture and a second location in St. Peter as their son Brian and their other children started getting more involved in the business. They now offer the full range of interior brands and services.

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MN Valley Business • JUNE 2017 • 3

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JUNE 2017 • VOLUME 9, ISSUE 9 PUBLISHER Steve Jameson EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Heidi Sampson Nell Musolf Tim Penny 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..........25 ■ Retail trends.....................................26 ■ Agriculture Outlook..........................27 ■ Agribusiness trends..........................28 ■ Construction, real estate trends.....29 ■ Gas trends........................................30 ■ Stocks...............................................30 ■ Minnesota Business updates............31 ■ Job trends.........................................31 ■ Schmidt Foundation.........................33 ■ Greater Mankato Growth..................35 ■ Greater Mankato Growth Member Activities ............................37

From the editor

By Joe Spear

Business rebounds among uncertainty You can still hear the gnashing of teeth among preservationists as they recall the urban renewal efforts of Mankato in the mid1970s that brought down a lot of Mankato’s historic, but somewhat crumbling, buildings. The Odd Fellows Building comes to mind, and numerous old stores along Mankato’s storied Front Street shopping district. Some even saw a future in the old City Hall that had been transformed decades earlier from the old Standard Oil building. You can now walk the halls of Mankato Place and see pictures of the old buildings that used to grace Front Street, where the former mall and now office center now stands. The Brett’s department store building stands as one of the few that was remodeled, repaired and repurposed. But in a case of what goes around comes around, there now appears to be somewhat of a Renaissance for Old Town and its own historic structures. Interest and activity in Old Town commercial real estate is described as strong and “positive,” according to Scott Fee, a Minnesota State University professor and consultant with Coldwell Banker Fisher Commercial real estate. He described robust business activity as “an amazing alignment of things all at once.” Minnesota State University has anchored its business collaboration, partnership and consulting organizations in the old Hubbard Building. They include the Small Business Development Center and the new MSU Center for Innovation and Entrepreneurship New businesses continue to move into Old Town and others are expanding. Friesen’s Family Bakery and Soup Bar is buying

4 • JUNE 2017 • MN Valley Business

the building next store to it and building a significant expansion into a larger building occupying both lots. It will have retail on the ground floor with loft apartments on the upper floors. The “alignments” Fee talks about include plans for the restructuring of Riverfront Drive to be more pedestrian friendly. Plans are also coming to fruition on re-use of the old Coughlan quarry just north and west of the Old Town district. At the same time our cover story notes there is becoming a glut of retail space with Sears, Gander Mountain and Gordman’s closing. Developer Tim Lidstrom also notes an abundance of industrial space. On the housing front, the conventional wisdom suggests a high demand and low supply of houses for sale would translate into a sellers’ market. But Realtor Jason Beal notes that sellers are a little worried they won’t find a place to move with the market tight. So they’re reluctant to sell, thus exacerbating an already tight supply. There appears to be an uptick in construction materials costs as well, making new homes less attractive. Of course, the closing of three major national retail stores in Mankato in a short time create some joblessness that exceeds the normal changes one sees in an economy. The Mankato-North Mankato metro area lost about 200 jobs in March, compared to last year at a time when other regional centers grew jobs. One month does not make a trend, but it will be an indicator to keep a closer eye on as the farm economy also struggles with low prices. It’s a double whammy the area hasn’t experienced in the recent past.

At this time of year, it’s important to watch what the Minnesota Legislature is up to, and by the time you read this let’s hope that they will have finished their work. Business will be impacted by legislation in this state budget year more so than in past years. Property tax relief is in the pipeline. Tax cuts were on the table for business and individuals. But increases proposed for university funding were moderate at best. And a new federal government is creating all kinds of surprises and uncertainties with big issues including health care, tax reform and infrastructure proposals that suggest enormous economic impact. 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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Brudelie earns certification

AmberRose Brudelie, of the city of Mankato, recently became certified as a Minnesota Certified Municipal Clerk through the Minnesota Clerks & Finance Officers Association’s certification program. To become a certified MCMC, applicants are required to be a MCFOA member for at least three years, to have completed extensive education programs, and to affirm that they believe in and practice the MCFOA Code of Ethics. Those hoping to become certified also require experience serving a municipality either with elections, human resources management, general management, meeting administration, execution of official documents, records management, financial management or management of legal instruments.

and Spencer, Iowa; and Fargo, North Dakota ■■■

ISG moves up ranking

ISG moved up more than 100 spots to No. 349 in the annual rankings by Engineering NewsRecord magazine. The Top 500 Design Firms list outlines the largest United States-based design firms, both publicly and privately held, based on designspecific revenue. ISG recently celebrated its 44th anniversary and transitioned to 100 percent employee ownership through a new ESOP structure. Through a 2016 acquisition, which is one of three strategic moves over the past five years, ISG now has eight offices in three states, as well as a considerable amount of work with clients outside of its Midwest footprint. ■■■

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Bolton & Menk climbs to 161

Workman earns award

Bolton & Menk, Inc. climbed 18 spots to No. 161 in the annual ranking of the Top 500 Engineering Design Firms released by Engineering NewsRecord. Since 1996, Bolton & Menk has increased in ranking each year. Bolton & Menk provides services in the areas of civil and municipal engineering and planning, water and wastewater, water resources, transportation planning and engineering, and aviation. The firm also provides landscape architecture, structural engineering, environmental review, land sur veying, GIS mapping, protective coatings, and funding assistance services. They have a staff of more than 450. Their corporate office is in Mankato and they have offices in Baxter, Burnsville, Chaska, Fairmont, Maplewood, Ramsey, Rochester, Sleepy Eye, and Willmar, Minnesota; Ames, Cedar Rapids, Des Moines, Jefferson,

T o n y Workman, CFP, has, for the third consecutive time, been awarded the Five Star Wealth Manager Award for 2017. This honor Tony Workman appeared in the Minneapolis-St. Paul Magazine and Twin Cities Business. Award candidates were evaluated on 10 objective criteria. Workman is the owner of Workman Retirement Planning, LLC, which was started in 1966 by his father Jerry. ■■■

All American promotes Stokman

Food ingredient manufacturer All American Foods promoted Connie Stokman to managing director. As a member of All American executive department,

MN Valley Business • JUNE 2017 • 5

she will be responsible for overseeing and assisting the company’s divisional directors She has been with the company for 22 years, beginning as Human Resources Director. All American has grown to own and operate four ingredient manufacturing facilities located in southern Minnesota. ■■■

Davis receives designation

Al Davis, a Financial Advisor with Ameriprise Financial in Mankato, recently received the Accredited Portfolio Management Advisor designation from the College of Financial Planning. Individuals who hold the APMA designation have completed a course of study encompassing client assessment and suitability, risk/retur n, investment objectives, bond and equity portfolios, modern portfolio theory and investor psychology. Davis is part of Wealth Management Solutions, a financial advisory practice of Ameriprise Financial Services, Inc.

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Business Commentary

By Tim Penny

Minnesota entrepreneurs need support, boost F

or the second year, Minnesota ranks first of the 25 largest states in the Kauffman Index for Main Street Entrepreneurship. We have the highest rate of business owners (7.75 percent), established small business density (687.2 small businesses per 1,000 firms) and business survival rate (50.75 percent that made it to at least five years in business). However, while we’re going great as a state for established businesses, Minnesota is not doing so well when it comes to new entrepreneurs. The Kauffman Index also measures Startup Activity and Growth Entepreneurship. Of the 25 largest states, we rank 21 in terms of new Startup Activity and 15 for Growth Entrepreneurship (rate of startup growth). We do need to keep supporting existing entrepreneurs - they are job creators and economic drivers. However, we also need to develop a healthy pipeline of new entrepreneurs. Given the high risks of starting a new business, Southern Minnesota Initiative Foundation (SMIF) is focused on working with our regional partners to create a thriving entrepreneurial ecosystem. To catalyze entrepreneurs still on the fence about taking the first big step, we partner with Minnesota Cup - the nation’s largest statewide business startup competition - and Ignite Cup in Red Wing, a feeder business competition for the Minnesota Cup. This year, we’re offering three $5,000 grants to the businesses from SMIF’s 20-county region that have the most success at Minnesota Cup.

Every fall, we host the Entrepreneurial Bridge conference in Austin. This is a chance for high-growth, highpotential business leaders in our region to learn from each and from industry experts. Part of the Entrepreneurial Bridge is a Student Business Plan Competition. This year, students have a chance to win $10,000 in prizes, plus practice making businesses pitches in front of the Foundation’s Leadership Circle. SMIF is also wrapping up a two-year pilot program to help our region’s minority business owners: The Prosperity Initiative. According to a 2017 University of Minnesota report, “Immigrants and Minnesota’s Workforce,” it’s predicted that by 2035, 25 percent of Minnesota’s population will be people of color. To help these highly entrepreneurial yet often underresourced populations, SMIF used funds from Minnesota DEED to match 25 minority businesses with business coaches and to host several business conferences and trainings. When SMIF surveyed minority business owners, 91 percent indicated they would benefit from additional resources to help their business grow. Because SMIF is a foundation, people often don’t know that it has the ability to make loans. However, SMIF has a range of loan programs to help small businesses that may not qualify for bank financing or that need additional funds to “bridge the gap.” The Foundation makes $1.2-$1.5 million in loans annually and has made nearly 600 loans in the past 30 years.

8 • JUNE 2017 • MN Valley Business

Just this month, SMIF announced our newest entrepreneurial initiative: REV Rural Entrepreneurial Venture. REV utilizes the Center for Rural Entrepreneurship’s proven Energizing Entrepreneurial (e2) Communities framework to help rural communities identify and support entrepreneurs already invested in their town. REV will build on the Foundation’s history of asset-based community development, focusing on helping communities develop long-term strategies and tools to bolster and sustain entrepreneurial activity. SMIF knows that our Greater Minnesota communities have a lot of offer entrepreneurs: a range of technical assistance and community bank partners, lower cost of living and a culture of collaboration and support. We need to make sure that people are aware of all the resources available to them. At SMIF’s recent board meeting, we heard from one of our Prosperity Initiative clients, Angel Uribe, the owner of Stages of Change Center in Mankato. “I’m now part of a business community. That inclusion has been transformative not only to my business and my bottom line, but to me as a business owner. You’ve allowed me to take my passions and dreams and turn them into something really amazing,” Angel told SMIF’s Board.

Tim Penny is president and CEO of SMIF. timp@smifoundation.org or 507-455-3215.

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Developing story Agents, developers face mixed markets By Tim Krohn | Photos by Pat Christman

ommercial and residential real estate agents are encouraged by continuing demand and growth locally, but both sectors face some challenges. “I’m tr ying to put things together. It seems to be taking a little longer than previous years,” said Kyle Smith, of Tailwind Group, which focuses on office, retail and apartment development. Commercial Realtor Tim Lidstrom said he senses a bit of a slowdown, too, after a few years of strong development both downtown and on the hilltops of Mankato and North Mankato. “This year you don’t see as many backhoes digging as you did in years past, so hopefully that will increase.” One area of stronger

commercial activity has been in the Old Town and City Center, said Scott Fee, who is on the Minnesota S t a t e University faculty and does consulting work with the Coldwell Banker Fisher Commercial real estate firm. “All the people I talk to, who’ve tried to redevelop Old Town since the ‘70s and ‘80s, say there’s never been a time where so many things are overlapping and collaborating.” For agents selling existing homes in the region, there is frustration that demand is outstripping the supply of available houses. “In my 20 years this is probably the most frustrating market I’ve been in,” said Realtor Jason Beal. “There are always frustrations,

Cover Story

10 • JUNE 2017 • MN Valley Business

but to have people not being able to find what they want in a growing economy is tough to grasp.”

Changing landscape

While Smith says new projects are coming a bit slower, Tailwind is far from idle. Smith is working on a big project in downtown Mankato, hoping to add floors to the former orthodontics building next to the library and the Veterans Memorial Bridge. He is hoping to add three floors to the one-story building, more

Commercial Realtor Tim Lidstrom says demand for downtown office space remains strong. than tripling its size. It would house PrairieCare, a mental health care facility for children, adolescents and adults. Tailwind also has been renovating the former Old Country Buffet building outside the entrance to River Hills Mall. They’ve already announced a Buffalo Wings & Rings restaurant will open in one space. “We have another space leased but not announced yet, so it’s 75 percent leased. It’s opening in September,” Smith said.

“A real bright spot is a strong demand for people coming downtown into refurbished or new office buildings. There’s a real appetite for that,” Lidstrom said.

They are also renovating the former Car-X building, off Madison Avenue in front of WalMart, for use as a restaurant. One area of the market Smith and Tailwind have been heavily involved in — student rental housing — isn’t strong locally. Tailwind and others built or renovated college housing at a brisk pace in recent years. “The student housing market, where we play in, is saturated,” Smith said. Lidstrom said he’s seen one

MN Valley Business • JUNE 2017 • 11

MSU recently opened a presence in Old Town Mankato in the former Hubbard Milling office building. area of the leasing market remain very strong. “A real bright spot is a strong demand for people coming downtown into refurbished or new office buildings. There’s a real appetite for that,” he said. Lidstrom said there is an overabundance of available industrial space available locally. “There’s several hundred thousand square feet of industrial space out there. That ‘s going to be interesting to see what happens.” One of the biggest shakeups in the local real estate market has been in retail. In recent months Sears in River Hills Mall, Gander Mountain and Gordman’s, which shared a large building across Highway 22 from the mall, have closed, part of the national pressure on retailers by the likes of Amazon. “The retail clicks versus bricks is a big thing right now,” Lidstrom said. “Any loss of retail is a concern. Not only have those two big buildings gone dark, but

spaces in strip malls have gone dark. With anyone being able to order anything they want on their phone day or night, I don’t see that changing.

“I don’t think people are shaken by it. It’s a transition. Brick-and-mortar retail stores are really challenged, but there’s still a need for the built environment,” Fee said. “It’s a challenge for the real estate market.” He said that with strip-mall space available, it will be difficult to divide the bigger buildings into

12 • JUNE 2017 • MN Valley Business

smaller spaces and find enough tenants. “And everyone wants front exposure and that’s hard to do with those big, deep buildings. I think they’ll be empty for a while.” Fee said the big disruption in retail shouldn’t cause despair. “I don’t think people are shaken by it. It’s a transition. Brick-andmortar retail stores are really challenged, but there’s still a need for the built environment,” Fee said. “We’ll find ways to fill them and be creative. No one is panicking about it.”

Old Town Renaissance

While there may be some softness in traditional commercial, industrial and retail development, activity in the historic Old Town district along Riverfront Drive in Mankato and elsewhere in downtown remains strong. Fee has focused on helping develop new collaborative efforts in Old Town that involve landlords and groups of area tenants joining

Scott Fee, a MSU faculty member who consults with Coldwell Banker Commercial Fisher Group, in Old Town Mankato. to buy and renovate buildings for lease or sale and working with MSU, Greater Mankato Growth and others to spur activity. “The mood is positive. I had a guy in from Manhattan last week looking to start a business and we walked in Old Town and elsewhere, and everyone we ran into had a story about all the things going on,” he said. “There is just an amazing alignment of things all at once,” Fee said. “I haven’t seen differing agendas colliding. I think everyone is moving in the same direction.” That activity includes renovations and new businesses as well as plans to reuse a large former limestone quarry in the area as well as MSU moving into the former Hubbard Building in Old Town. MSU has an innovation center and business collegerelated programs at the site. The Small Business Development Center also is housed there and more is planned. “It’s not an incubator,” Fee said

of the building. “But it’s a place where people from all different industries can cross paths all the time, find new ways of doing business, new collaborations.”

“There is just an amazing alignment of things all at once,” Fee said. “I haven’t seen differing agendas colliding. I think ever yone is moving in the same direction.” He said he hopes Rasmussen, Bethany and Gustavus colleges also someday have a presence at the site.

Houses needed

The shortage of houses listed for sale has been ongoing and is getting worse. In March, there were 267 new listings in south-central Minnesota, according to the Realtors Association of Southern Minnesota. That’s down 16 percent from the same month last year and down 21 percent from two years ago when there were 337 new listings in March. Beal and other Realtors say that while many people want to buy a new home, they are fearful of putting their own home up for sale. “People aren’t selling because they don’t know where to move to. They don’t want to sell and get themselves into a predicament.” Part of the problem is fewer people are building new homes — homes that would open up their existing homes to be sold. “New construction is going, but it’s not real strong,” Beal said. Much of the residential

MN Valley Business • JUNE 2017 • 13

Dancing Waters

construction in recent years has been focused on apartments, both high-end and so-called workforcepriced rental. But Beal said that just creates more renters rather than homeowners. Home builders and real estate agents say the slower new home construction has much to do with fairly steep rises in construction costs. They say more stringent building codes in recent years have added to costs, as well as higher labor costs and increases in material costs. “When you have (new) starter homes for $200,000 to $220,000, that’s a lot of money,” Beal said. North Mankato recently made some zoning changes for certain areas that allow for smaller lots than previously allowed. “That brings down the cost some. Hopefully that combination of smaller lots and smaller homes can bring in some more affordable homes,” he said. Demand for existing homes that are on the market is strong at all levels, Beal said.

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“There’s a larger pool for the under $200,000 homes, but we have clients spending $600,000 to $800,000 who are looking for a specific product and if it’s not out there, they look at building. But building is very expensive and they wonder if they’re going to get their investment back or have a loss down the road.” He said that while he and other agents hope for change, it’s hard to see a path out of the situation. “On the local and national level new construction costs are high. What will change that and bring that down? There’s talk of material costs jumping again. Code changes over the years have driven up costs. Unless those costs get under control, equilibrium is hard to find,” Beal said. “I wish there was a magic bullet but there isn’t one right now.” MV

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Brian, left, Cindy and Kevin Berger of Berger Interiors.

Building relationships Berger Interiors serves St. Peter, Belle Plaine By Heidi Sampson Photos by Pat Christman

erger Interiors, with locations in St. Peter and Belle Plaine, is owned and operated by Kevin and Cindy Berger. Kevin has been in the flooring industr y for more than 30 years, beginning his career as a flooring installer. Over the years he’s worked for various major companies as well as independently. In 1990, Kevin and Cindy decided to open a retail-flooring store in downtown Belle Plaine. They expanded their business to both furniture and flooring in the fall of

1999. When their oldest son, Brian showed an interest in the business by becoming an installer himself, Kevin and Cindy started to look into expanding their business. “We did a lot of research on different areas,” said Kevin, “so when Brian moved into the sales and managing side of the business, we knew we had an opportunity to expand if we wanted too. We researched around 15 different locations, then narrowed our possibilities down to three, and then asked

Cover Spotlight

16 • JUNE 2017 • MN Valley Business

Top: The Bergers originally started selling flooring but soon added furniture and other items. Right: Berger Interiors started in Belle Plaine but expanded to a second location in St. Peter. for help from a specialist. We decided to go with St. Peter, opening our second location in 2014.”

Family Owned

All eight of Kevin and Cindy’s children have helped in one way or another with Berger Interiors. Rachel assists with graphic design and advertising, Megan assists with human resources and marketing, Michael – who’s graduating from high school this spring – also helps with installation and in the Belle Plaine store. Cindy handles the books and works as lead purchaser for their two locations. Brian is now the manager of the Belle Plaine location, while Kevin works out of the St. Peter location. “We’ve always loved St. Peter,” said Cindy. “The city has so much character. The location we purchased was previously a business similar to ours, except they had closed up the retail side of things. So, this location was a really good fit for us.” Berger Interiors targets all aspect of the home interior project from floor coverings, to countertops, window treatments, furniture and home interior accessories. They offer popular brands including Ashley, Alco, Best Craft, Franklin, Marshfield, Liberty, T.E.I., and Fashion Bed Group. They also assist those building new homes or remodeling, as well as commercial businesses. Although, they’ve currently seen an increase in new housing, Kevin’s learned through the years that it’s best to maintain a wellrounded business with a wide concentration versus too narrow of a focus, such as only working with new projects or only working with remodels. “When the housing market crashed,” Kevin said, “I

watched a lot of really good businesses sell out because their focus was too narrow. I think it’s better to go with the times, which means maintaining a wider list of specialties.” Kevin and Cindy are celebrating 35 years of marriage. In their marriage and in their businesses, the couple believes in honesty. As a family based business, they like to take the time to get to know their customers. They want to build a relationship with their customers. By taking the time to develop that relationship they believe they can ensure customer satisfaction. “At Berger Interiors we pride ourselves in offering a complete line of product for every style, home, and budget. We have two interior designers who can assist as well. Being a small town business with a variety of vendors, we are able to provide our customers with the numerous options and competitive prices along with personal, one on one, beginning-to-end service that’s hard to find. If you have a question, we will be here to answer. We want our customers to return. So, we take pride in building long lasting relationships.” MV

MN Valley Business • JUNE 2017 • 17

Sonja Swenson has operated Sticks and Stones in Mankato for 14 years.

Planting little seeds Sticks and Stones’ Haiti connection By Nell Musolf | Photos by Pat Christman

or the past 14 years Sonja Swenson’s store, Sticks and Stones, 1027 N. Riverfront Dr., has been providing local shoppers with out of the ordinary clothing, jewelry and accessories. When Swenson opened Sticks and Stones in 2003 her focus was more on beading and teaching other people how to create their own beaded jewelry. “This entire area was devoted to beads,” Swenson said, indicating the roomy back of her storefront. “We had a lot of beads.” The beading craze began to slow down around the same time the line of clothing at Sticks Stones began to take off and Swenson realized that she needed to do something with all of those beads. “The clothes were doing so well and we needed the space where the beads were,” Swenson recalled. “But I wasn’t sure how to get rid of them I wanted to be a good steward of the beads. I didn’t want to just dump them. I wanted to put them to good use. We still sell

beads but not as many as we once did.” Swenson decided to contact a ministry group that taught women sewing in Haiti and asked if the group would be interested in having Swenson and her daughter go to Haiti and teach women how to make beaded jewelr y. The response was not the one she hoped for. “We were turned down,” Swenson said. “At first I was disappointed but then I realized that it wasn’t the right time. I think it was really a God thing. When the time was right, everything fell together.” The right time occurred in 2012 when the ministry Swenson had contacted arranged for Swenson and her then 17-year-old daughter, Shelbi, to go to Haiti and teach classes in beading. The experience turned out to be the first of twice yearly trips that Swenson and her daughter have taken every year since 2012. “We go for a week in the summer and December,” Swenson said. The mother and daughter duo spend their week in

Profile

18 • JUNE 2017 • MN Valley Business

Swenson with some of the entrepreneurs she works with in Haiti. Haiti leading seminars on the fine art of jewelr y making. The venture has grown in ways Swenson never anticipated. “I kept thinking there’s more I can do,” Swenson said. “There are more ways I can help.” Swenson’s intuition was correct and in 2013 she started Seeds Jewelry, a for-profit company that sells the intricately beaded jewelry made by artists from northern Haiti. The venture has grown to the point where it is sold in stores around the country, including Sticks and Stones. Seeds Jewelry keeps Swenson busy attending major jewelry shows in places such as Dallas and Atlanta. “We are in over 1,000 stores and we have over a 100 stores waiting to get on our list,” Swenson said. Seeds Jewelry is part of the Haiti Design Co, a group that produces goods for a number of companies. Leather work, jewelry, clothing and bead work are among the products created. Haiti Design Co was created to bring together artists with the goal of

sustainable development. “I really just have a front row seat to a lot of good that is happening,” Swenson said. In Januar y of 2016 Seeds Jewelry began to train two men how to solder jewelry. “I’m pretty sure we have Haiti’s only soldering training,” Swenson said. Every aspect of Seeds Jewelry is done by hand from the soldering to the tying of leather tassels. Swenson estimated that approximately one-third of the work is done in Haiti and the other two-thirds is done in America. Swenson compared going to Haiti and working with a wide variety of artists to a dinner table where everyone brings something different to share. “We’ve met some amazing people,” Swenson said. “I feel like there are so many good things I get to see. I really get to see the best of our world where people are helping each other and learning from each other. We always know how much good we’re surrounded by.”

Seeds Jewelry makes necklaces, bracelets and earrings and are in the price range of $16 to $40. Swenson continues to make her own jewelry. Swenson’s jewelry is sold at Sticks and Stones and was recently added to Herberger’s “Close to Home” shops, sections of the stores that feature products from Minnesota small businesses. Swenson creates “State Pride” jewelry for the “Close to Home” shops. “I would like to be a voice for sustainable work,” Swenson said. “I don’t like talking to large groups but I enjoy one on one conversations with people about what we’re doing in Haiti. One of my goals is to help show people how they can help. We’re just planting little seeds.” MV

MN Valley Business • JUNE 2017 • 19

Scott Reisenbigler has years of experience at restaurants around the country.

A shout out to Guy Ann Marie’s hopes to draw show’s attention By Heidi Sampson Photos by Pat Christman

cott and Katie Reisenbigler, owners of the new Ann Marie’s Kitchen in Winnebago think their place is worthy of a visit from Guy Fieri and his popular cable reality show. They even named a burger after the host as part of their marketing effort to attract the show’s attention. Diners, Drive-Ins and Dives - nicknamed

Triple D - is a reality television series focused on food and featuring Fieri of the Food Network. The show premiered in 2007, and has since become the authority resource for top diners in the America, Canada, Italy, Britain, Mexico and Cuba, with a list of more than 900 dinners and restaurants visited, from more than 350 cities. The show features a

Feature

20 • JUNE 2017 • MN Valley Business

The Reisenbiglers opened their new restaurant in downtown Winnebago in March. “road trip” concept. Each episode generally has a unifying theme with the host visiting multiple restaurants to sample the food. Triple D focuses on small, independent eateries featuring traditional American-style food such as barbecue, smoked meat, hamburgers, deep-fried food, pizza, steak, and bacon-and-egg breakfast, regional specialties or ethnic foods. During their grand opening a couple of months ago, Ann Marie’s unveiled #guysbigboyburger, hoping to draw the host of Diner, Drive-Ins and Dives to their location. The burger features ground beef brisket, pulled pork, bacon, onion straws and BBQ sauce on a jalapeño bun. #guysbigboyburger stacks up between 9-10 inches tall when complete. Customers who order the burger get a photo taken and are encouraged to post their picture and burger shots on Facebook and Twitter using the hashtag #guysbigboyburger. For those youngsters who are craving a #guysbigboyburger, have no fear. Scott plans to unveil #guyslittleboyburger on slider buns.

in Minneapolis. One horribly cold Minnesota day produced an offer to move to Orlando as a supervisor of a Planet Hollywood. Scott jumped at the chance, trading in Minnesota’s frigid winters for Florida’s warmth and sunshine. The move proved to be a successful venture as Scott tabbed $55.5 million in sales in his first year. Over the years he worked at various restaurants, gaining experience from those he trained with while trying his hand at different culinar y aspects of the food service industry. For instance, at the Rainforest Café he took a position as a sous-chef in Washington D.C., he worked at Joe’s Crab Shack, a fine dining restaurant and finally a private country club. He’s done it all from dishwasher to executive chef. “In the restaurant business you can’t stay stationary. You got to move to experiment and learn the trade.” Scott’s signature BBQ sauce, also available at Ann Marie’s Kitchen, was developed at a private country club in Arizona about six years ago. He remembers coming into to work directly after Thanksgiving and realizing the country club had literally nothing left. So, in an attempt to create a dinner entree out of nothing, he played around with what he did have, cranberries. MN Valley Business • JUNE 2017 • 21

“In the restaurant

business you can’t stay stationar y.

You got to move to experiment and

learn the trade.”

Dishwasher to Entrepreneur

Scott began his career in the food industry at Bonanza, in Mankato, when he was 15 years old. Eventually he worked as a fry cook at Planet Hollywood

Scott Reisenbigler with his #guysbigboyburger, a massive invention named for Guy Fieri of ‘Diners, Drive-Ins and Dives.’

Customers who buy the bigboyburger get their photo posted at Ann Marie’s.

22 • JUNE 2017 • MN Valley Business

Unknown to him at the time, he’d created his signature Cranberry BBQ Sauce. That day, he’d served his Cranberry BBQ sauce with meatballs. The entree was a hit, which is also where his love of BBQ started. Fast forward six years, Scott and his wife, Katie, settled into Winnebago. Last summer, Scott went to Winnebago’s City Hall hoping to receive approval of his request for a food truck to be utilized during Winnebago’s Fun Fest. The city administrator capitalized on the moment, selling the idea that Scott should look into the former Winnebago Grill. By February of this year they purchased the business. After renovation they did a soft opening in March while testing his latest best seller, a pulled pork wrap with cranberr y mayonnaise sauce, topped with fried onions, red peppers and jalapeños. Some weekends, Scott pulls his smoker - which is large enough to cover an entire parking stall - onto Winnebago’s Main Street where he prepares for the day. It doesn’t take long for the smoker to draw a crowd. “Ann Marie’s Kitchen is actually named after my mother,” said Scott when asked why he chose the name he did. “She passed away when I was a month old. I was the youngest of five children. In our dining room, customers will find pictures of my mother. Since I was so young when she passed away, I have no memories of her. This business adventure, naming the store after her, has been a great way to bridge the family as they’ve shared their memories of her with me throughout the creation of Ann MV Marie’s Kitchen.”

RICKWAY CARPET

507.625.3089 1107 Cross St.| North Mankato Mon. - Thurs. 9am-8pm, Fri. 9am-6pm Sat. 9am-4pm, Closed Sun.

www.rickwaycarpet.net

HOURS OPEN:

Wednesday through Sunday 11 a.m. to 8 p.m.

Sundays

11 a.m. to p.m.

MN Valley Business • JUNE 2017 • 23

■

Business and Industry Trends

Energy Light bulb transition

As lighting technologies evolve and adapt to federal standards, lighting in U.S. homes is in a state of transition. Data from the 2015 Residential Energy Consumption Survey show that most homes in the United States used more than one type of light bulb, primarily a mix of incandescent and compact fluorescent (CFL). Adoption of light-emitting diode (LED) bulbs has been increasing, with 29 percent of U.S. households reporting at least one LED bulb installed. Residential lighting generally shifted from less energy-efficient lighting, primarily incandescent bulbs, to more energy-efficient lighting, including CFLs and LEDs. In 2009, 58 percent of all households used at least one energy-efficient bulb indoors. In 2015 86 percent of households

reported using at least one CFL or LED bulb. Nationwide, 18 percent of households reported that they had no incandescent bulbs in their homes. Increasing the use of energyefficient lighting has been a focus of many programs conducted by state and local governments and

electric utilities. Efforts such as the federal ENERGY STAR program and the Lighting Facts labeling program were intended to help consumers make informed lighting choices. Energy efficiency programs administered by utilities and agencies in many states offered free or subsidized

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24 • JUNE 2017 • MN Valley Business

high-efficiency bulbs and provided education about energy efficiency. According to the study, while most U.S. housing units have been using at least some energy-efficient bulbs, certain characteristics are associated with a higher rate of adoption: Renters may not be responsible for their own lighting choices or may not pay their electricity bills directly, so they may not be as invested in improving the energy efficiency. Although the cost of LEDs has fallen dramatically, the upfront cost of newer bulb technologies, particularly LEDs, is often higher than for incandescent bulbs, and higher-income households have adopted efficient bulbs at a faster rate. Updating a home’s lightbulbs may be a common suggestion made in an energy audit: 95 percent of homes that had an energy audit reported having CFL or LED bulbs, compared with 85 percent of homes that did not have an energy audit.

Summer gas: $2.46

For the 2017 April-through-September summer driving season, U.S. regular gasoline retail prices are forecast to average $2.46/gallon, compared with $2.23/gal last summer, according to the Energy Information Administration. The higher forecast gasoline price is primarily the result of higher forecast crude oil prices. For all of 2017, the forecast average price for regular gasoline is $2.39, which, if realized, would result in the average U.S. household spending about $200 more on motor fuel in 2017 compared with 2016

Crude production up

U.S. crude oil production averaged an estimated 8.9 million barrels per day in 2016. U.S crude oil production is forecast to average 9.2 million b/d in 2017 and 9.9 million b/d in 2018. North Sea Brent crude oil spot prices averaged $52 per barrel in March, $3 lower than the February average. EIA forecasts Brent prices to average $54/b in 2017 and $57 in 2018. West Texas Intermediate crude oil prices are forecast to average $2 less than Brent prices in both 2017 and 2018.

More natural gas

U.S. dry natural gas production is forecast to average 73.1 billion cubic feet per day in 2017, a 0.8 Bcf/d increase from the 2016 level. This increase reverses a 2016 production decline, which was the first annual decline since 2005. Natural gas production in 2018 is forecast to be 4.0 Bcf/d above the 2017 level. In March, the average Henry Hub natural gas spot price was $2.88 per million British thermal units, 3 cents/MMBtu above the February level. Prices increased as temperatures in March returned to more seasonally typical levels after being significantly warmer than normal in February. New natural gas export capabilities and growing domestic natural gas consumption contribute to the forecast Henry Hub natural gas spot price rising from an average of $3.10/MMBtu in 2017 to $3.45/MMBtu in 2018.

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2015 - 2016 701 874

1500 1200 900 600 300 0

Source: Sales tax figures, City of Mankato

Sales tax collections Mankato (In thousands)

- 2015 - 2016

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

$427 $425

600 500 400 300 200 100 0

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato - 2015 - 2016 70000

$56,559 $52,400

52500 35000 17500 0

Source: City of Mankato

Mankato food and beverage tax - 2015 - 2016 175000 140000

$58,935

105000

$57,100

70000 35000 0

Source: City of Mankato

C. Sankey

MN Valley Business • JUNE 2017 • 25

■

Agricultural Outlook

By Kent Thiesse

Farmers face difficult grain marketing decisions

any farmers will tell you of 2017. Farmers have been that one of the most patiently waiting for the corn and difficult things to do in soybean markets show a Spring managing a farm operation is to price rally, which usually occurs make grain marketing decisions. between March and June. As of In the days or weeks following May 10, 2017, any Spring rally in the date that a decision is made to the grain prices had been very sell a portion of the grain that was limited, with only a slight grain produced last year, or the grain is price improvement in early May, anticipated to be produced in the due to some planting delays in coming year, there is at least a 50 portions of the Midwest. The percent chance that the market large anticipated 2016-17 ending may go higher. For many stocks for both corn and soybeans, producers, this makes the grain along with a rather robust planting market sale seem like a “wrong intentions report on March 31st, decision”, even if the sale price has raised concerns about any was at a profitable level. However, significant grain market there is also likely an equal improvement during the Spring chance that the grain prices may or early Summer of 2017. decline in the days or weeks after Following the May 10th USDA the sale, which could cut into Supply and Demand (WASDE) profit margins, or lead to net Report, the Chicago Board of losses. Trade (CBOT) May corn futures The grain marketing decisions closed at $3.65 per bushel, which get even more difficult in a year is basically steady with nearby such as 2017, when many farm corn futures prices in recent operators still have a large months. Closing prices for nearby amount of 2016 corn and soybeans corn futures were $3.58 per stored on the farm, waiting for bushel on January 12, $3.69 per favorable market prices. bushel on February 9, and $3.59 According to the March 31st per bushel on March 9, and $3.66 USDA Grain Stocks Report there per bushel on April 1. Similarly, was over 4.9 billion bushels of local cash corn prices in Southern corn and just over 668 million Minnesota have generally been in bushels of soybeans stored on the $3.10 to $3.25 per bushel farms in the U.S., as of March 1, range most of the time during 2017, which represents about 56 2017, with lower cash prices in percent of the total corn stocks some areas. and 40 percent of the total CBOT May soybean futures soybean stocks. There were 770 had a closing price of $9.61 per million bushels of corn and 93 bushel on May 10, the date of the million bushels of soybeans in onmost recent USDA WASDE farm storage in Minnesota on Report. Nearby soybean futures March 1, 2017, and an estimated prices have been fairly steady in one billion bushels of corn and the past couple of months, but 115 million bushels of soybeans have dropped significantly since still in on-farm storage in Iowa. earlier in 2017. Closing prices for Based on those figures, there is nearby soybean futures were a considerable amount of 2016 $10.46 per bushel on January 12, grain, especially corn, remaining 10.50 per bushel on February 9, in on-farm storage, much of 10.00 per bushel on March 9, and which likely still needed to be $9.39 per bushel on April 11. Cash priced in the spring and summer 26 • JUNE 2017 • MN Valley Business

prices at the soybean processing plants in Mankato were near $9.25 per bushel in early May, which were the highest cash soybean price levels since late March, 2017, but were $.70-$.90 per bushel lower than cash soybean prices in January and February. Soybean cash prices at local grain elevators in Southern Minnesota have typically been in a range of $8.50-$8.90 per bushel since late March. The local price “basis”, which is the difference between the CBOT futures price and the local cash price, has remained quite wide for both corn and soybeans in most areas of the Upper Midwest. The local basis for corn prices has been $.40-$.50 per bushel at most locations across Southern Minnesota and Northern Iowa, except at grain terminals, with even wider basis levels in Western Minnesota and the Dakota’s. Similarly, soybean basis levels in the same region have been at $.70-$.90 per bushel, and about $.50 per bushel at the soybean processing plants. It will be hard to achieve much basis improvement in the coming months, considering the large supply of U.S. corn and soybeans that has been projected at the end of the 2016-17 marketing year. About the only scenario that could tighten the basis would be development of a fairly major U.S. drought during the 2017 growing season. Based on farm business management records in Southern Minnesota, the average 2016 corn yield on cash rented land was nearly 205 bushels per acre. The average “breakeven” market price was about $3.20 per bushel to cover cash input expenses and land rent, and about $3.71 per bushel to cover all direct and overhead expenses. For

producers that had weather issues in 2016, and averaged closer to 190 bushels per acre, the breakeven corn price is about $3.80 per bushel to cover cash expenses and land rent, and near $4.30 per bushel to cover total costs of production. Outside of a brief opportunity to forward price 2016 corn between $3.50 and $3.90 per bushel during the late Spring and early Summer of 2016, producers have had limited opportunities to market the 2016 corn crop at profitable levels. The farm business management records for Southern Minnesota indicated an average 2016 soybean yield on cash rented land just over 61 bushels per acre. The average “breakeven” market price was $7.10 per bushel to cover cash input expenses and land rent, and about $8.21 per bushel to cover all direct and overhead expenses. The low 20 percent profit farms in 2016 averaged closer to 56 bushels per acre, and a breakeven soybean price near $8.76 per bushel to cover cash expenses and land rent, and about $9.30 per bushel to cover total costs of production. The good news was that soybean local cash price ranged from $9.25 to $10.00 per bushel for much of the time from the completion of harvest in 2016 until mid-March, 2017,8allowing producers that sold their 2016 soybeans to capture a small profit on their 2016 soybean crop. Farm 6 operators with a significant amount of unpriced 2016 corn and soybeans that is still in storage need to pay attention to any short-term improvements in the 4 cash grain prices in the coming weeks. Historically, cash 2prices for “old crop” corn and soybeans tend to decline after July 1st in a given year, unless there is a major0 drought or other national weather event that J Faffects M AU.S. M crop J Jproduction. A S O The N last D significantly time that this occurred was in 2012. According to grain marketing data from Iowa State University for the past decade, local corn and soybean prices have decreased about 60-80 percent of the time during the months of 8 July and August, with an average decline of about 7-10 100 percent. 6 Given the seasonal trend in the corn and soybean 85 producers probably need to have a “calendar market, 4 target”, 70 as well as a “price target”, to sell the remaining 2016 corn and soybeans. Farm operators now face the prospect 552 of marketing the “old crop” corn in storage at cash prices below their 2016 breakeven levels. It may 400 to have a marketing plan in place to sell this be better J F M A M J J A S O N D grain in the next couple of months, even if it means 25 J F profit M loss, A M J than J Ahanging S Oon N D taking a small rather to the unpriced grain into the Fall of 2017, and risking even further price declines. Farm operators also need to watch the grain markets closely 100to take advantage of any cash price rallies for the 2017 corn and soybeans that is in the field, 85 if prices reach profitable levels. There could especially be some possibility of further price enhancements this 70 if drought conditions develop in the U.S.; Summer however, 55 there is also the possibility of rather significant price declines, if the 2017 crop prospects look favorable. Similar to growing a crop, every year is 40 different when it comes to grain marketing decisions, which25 is what J Fmakes M this A Maspect J of J farm A management S O N D so difficult. Kent Thiesse is farm management analyst and vice president, MinnStar Bank, Lake Crystal. 507- 381-7960; kent.thiesse@minnstarbank.com

Agriculture/ Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2016 — 2017

$3.19

16 12

2 0

$3.18

Source: USDA

Soybean prices — southern Minnesota

(dollars per bushel)

— 2016 — 2017 208 100 166 85 $9.34 12 470 8 255 $9.13 4 40 0 0 J F M A M J J A S O N D 25 J F M A M J J A S O N D J F M A M J J A S O N D Source: USDA

Iowa-Minnesota hog prices

185 pound carcass, negotiated price, weighted average

— 2016 — 2017

20 100 25 16 $72.90 85 22 12 70 19 8 55 16 $65.05 4 40 13 0 J F M A M J J 25 10 J F M A M J J J F M A M J J Source: USDA

Milk prices

25 22 19 16 13

A A A

S S S

O N D O N D O N D

Minimum prices, class 1 milk Dollars per hundredweight

— 2016 — 2017 25 22

$18.88

19 16

$15.54

13 10

20 25 16 22 12 19 8 16 4 13 0 J 10

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 • JUNE 2017 • 27

Construction/Real Estate Residential building permits Mankato

Residential building permits North Mankato

- 2015 - 2016 (in thousands)

18000

4000

13500

$452 $542

3000

$1,109 $5,226

9000

2000

4500

1000

Source: City of Mankato

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)

250

300

143

240

$143,000

200

132

$145,350

150

180

100

120

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

- 2015 - 2016

5.5

5.0 4.5

4.1%

4.0 3.5

4.0%

3.0

Source: Freddie Mac

Commercial building permits Mankato

Commercial building permits North Mankato

- 2015 - 2016 (in thousands)

18000

4000

$2,227

13500

3000

$1,119

9000

$202 $1,211

2000

4500 0

Source: Cities of Mankato/North Mankato

1000 J

Source: City of Mankato

28 • JUNE 2017 • MN Valley Business

Source: City of North Mankato

D C. Sankey

Gas Prices

Gas prices-Mankato

— 2016 — 2017

54 43 $2.29

32 21 10 0

M $2.02 J J

Gas prices-Minnesota

— 2016 — 2017

5 54 43

$2.25

32 21 10

$2.05

C. Sankey

Source: GasBuddy.com

Stocks of local interest

April 10

May 9

Archer Daniels Ameriprise

$44.61 $129.39

$42.36

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

$48.75 $53.81 $23.54 $57.29 $23.26 $57.29 $4.00 $61.25 $34.95 $189.88 $53.53 $50.96 $49.75 $1.66 $44.49

$128.95 $51.76 $56.55 $22.16 $45.47 $22.28 $56.31 $4.00 $65.60 $45.46 $197.69 $58.08 $51.49 $50.10 $1.35 $44.74

Percent change -5.2% -0.3% +6.2% +5.1% -6.0% -20.6% -4.2% -1.7% 0.0% +7.1% +30.0% +4.1% +8.5% +1.0% +0.7% -18.6% +0.6%

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C. Sankey

MN Valley Business • JUNE 2017 • 29

Minnesota Business Updates

■

■ Johnson sales soar

■ Solar grows in state

Johnson Outdoors Inc. reported double-digit increases in sales and earnings for its 2017 second fiscal quarter. For the quarter ended March 31, the Racine-based outdoor products company said net income was $14 million, or $1.39 a share, compared with net income of $9.3 million, or 93 cents a share, in the same period a year ago, according to the Milwaukee Journal Sentinel. Net sales were $149.8 million in the second quarter compared to $134.2 million in the prior year quarter. Net income during the first six months of fiscal 2017 more than doubled to $18 million, or $1.80 a share, compared with $8.8 million, or 88 cents a share, in the same period a year ago. Net sales for the six months were $243.5 million vs. $219.5 million a year ago. The results were driven by “strong new product momentum in the company’s fishing and watercraft recreation businesses,” according to a statement from Johnson Outdoors. Johnson Outdoors designs, manufactures and markets watercraft recreation, fishing, diving and camping gear. Johnson Outdoors’ brands include: Old Town canoes and kayaks, Minn Kota fishing motors, batteries and anchors and Humminbird marine electronics.

Growth in solar energy is continuing at a rapid pace in Minnesota, with nearly as much solar capacity added in the first three months of 2017 as in all of 2016, state officials said. Minnesota had just one megawatt of solar capacity in 2009. Now it’s 447 megawatts, or enough to power about 63,000 homes, according to Minnesota Public Radio. State Commerce Commissioner Mike Rothman said growth will continue throughout 2017, with several large projects coming online. “It’s not alternative anymore. It’s mainstream energy. This is like what wind was 10 or 20 years ago, where now we have 18 percent of our total electricity generated by wind,” he told MPR. Rothman said growth is fueled by both small rooftop projects and utility-scale solar facilities. Minnesota is expected to have 800 megawatts of solar capacity by the end of the year, he said. A state goal set in 2013 calls for solar to produce 10 percent of electricity by 2030. It’s currently only 1 percent.

■ Target expands delivery The Target run — a ritual for many families to stock

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

640 473 63 2,996 1,475

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

738 261 46 2,921 1,337

+15.3% -45.0% -27.0% -2.5% -9.4%

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.

Construction 122000 122000 Manufacturing Retail 111000 Services 111000 Total*

December ‘15 ‘16 12,355 5,871 1,443 6,707 26,376

122000

2000

111000

1000

(in thousands)

8000 3000 3000 6000

-1.7% -22.0% +2.7% -7.2% -7.3%

Services consist of administration, educational, health care and social 100000 assistance, food andJotherFmiscellaneous M A services. M J J A S O 100000 J don’t F equal M total A because M some J categories J A not S listed. O N *Categories

30 • JUNE 2017 • MN Valley Business

3000

Minnesota Local non-farm jobs

Percent change ‘14-’15

12,141 4,599 1,482 6,220 24,442

129,315

133000

100000

Minnesota initial unemployment claims Major Industry 133000 133000

- 2015 - 2016

Nine-county Mankato region

- 2015 - 2016 2,924

4000 2000 2000

2000 1000 1000 0 J F M A M J J A S O N D 0 D J F M A M J J A S O N D 0 J F M A M J J A S O N D

200000 150000 100000 50000 0

up on everything from laundry detergent to toilet paper — has a more direct online counterpart. Target Corp. is testing Target Restock, which is similar to Amazon’s Pantry program for Prime members, according to the Star Tribune. Like many other retailers, Target has seen the rising interest among consumers to not just buy books and electronics online, but also increasingly many of those mundane household staples. The challenge has been how to make doing so convenient for customers and cost effective for the retailer. Toward that end, through Target Restock, customers will be able to fill a large box of a specific size with as many items as can fit in it, choosing from more than 8,000 household essentials, beauty and personal care items and dry grocery products. The box, which is limited to 45 pounds, will then be shipped for a flat fee and arrive on their doorsteps by the next day if they place their order by 1:30 p.m., according to the newspaper.

■ 3M beats expectations

company said it saw gains in every region of the world, reflecting the broader alignment of growth in the major regional economies that has taken shape in recent months. “This was a very strong quarter for 3M, in terms of healthy, broad-based growth, increased earnings per share and good execution across each of our business groups and functions,” CEO Inge Thulin said in a conference call with analysts. “Equally important, we made additional investments to support growth and productivity for the remainder of 2017 and well into the future.” 133000 Those investments included the $2 billion acquisition of Scott Safety and $470 million — or 6.1 percent of sales — in research and development programs, Thulin 122000 said. 111000 ■ Xcel results lag

100000 J F

J M

J A

J S

Local number of unemployed

2000 4000 2000 1000

0 0

A O

S N

O D

6000

4,841

J M M

F M A M A M J J A M J J

J A A

J S S

A O O

S N N

O D D

100000 50000 M

- 2015 - 2016

96,182

J J M

F M A M FA M AJ MJ

J AJ

J SJ

A OA

S O O NS D

N D N D

(includes all of Blue Earth and Nicollet Counties) 200000 150000

November

100000

Unemployment rate Number of non-farm jobs 50000 50000 Number of unemployed

2000

0 0 F

100000

150000

D 0

150000

200000

50000

Mankato/North Mankato Metropolitan statistical area

4000

0 F F

2000

200000

Minnesota number of unemployed

8000

J J

1000

- 2015 - 2016

Nine-county Mankato region 8000 3000 6000

1000

Employment/Unemployment

F M A M A M J J

2000

Minneapolis-based Xcel Energy recorded first-quarter 100000 0 2017 operating J F earnings M A Mof 47 J cents J AperSshare, O lagging N D J the consensus estimate of 50 cents by 6 percent. The earnings were in line with the year-ago quarter. Despite the impact of unfavorable warmer winter temperatures, the company was able to match the yearago results due to higher electric and natural gas 3000 8000 and a lower effective tax rate. 200000 3000 margins Xcel’s first-quarter revenues of $2,946.4 million did 6000 the estimate by 1.3 percent. 150000 2000 surpass 2000 Natural gas quarterly revenues grew 10.6 percent to 4000 million. 100000 $625.7

3M Co.’s first-quarter results beat investors’ expectations with strong gains across the 133000 133000 globe, leading its executives to raise their outlook for the rest of 2017. 122000 The company’s profit jumped nearly 4 percent to $1.3 122000 billion, or $2.16 a share, well above the $2.06 a share that was the consensus forecast of investment analysts. Sales 111000 also grew nearly 4 percent to $7.7 billion. The 1000 111000 100000

3000

0 F

J M

F M A M A M J J

J A

2015

2016

2.2% 58,862 1,297

2.4% 57,441 1,439

J S

A O

S N

O D

Unemployment rates Counties, state, nation County/area Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan Minneapolis/St. Paul Minnesota U.S.

November 2015 2.2% 3.2% 3.6% 3.5% 2.8% 2.8% 3.1% 3.5% 4.1% 2.9% 3.1% 4.8%

November 2016 2.5% 3.2% 3.8% 3.7% 3.2% 3.2% 3.2% 3.3% 4.0% 3.0% 3.2% 4.4%

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

Minnesota initial unemployment MN Valley Business • JUNE 2017 • claims 31

Sponsored by the Carl & Verna Schmidt Foundation

Despite dire forecasts, bond funds doing fine By Stan Choe | Associated Press

fter turning in their worst quarterly performance in years, bond funds were supposed to keep struggling as the calendar flipped to 2017. Managers were busy early this year making sure expectations were properly low for bond funds, even after billions of dollars left them in November and again in December. But reality, at least so far, has turned out to be nearly the opposite of expectations. Rather than continuing to drop, bond prices have perked higher this year. That’s helped funds focused on intermediate -term U.S. government bonds return an average of 1 percent through the first third of the year, more than they have in three of the last four full years. Returns have been better for funds that add in corporate bonds, which have higher yields than Treasurys. The turnaround for bond funds, which serve as the safe corner of most 401(k) accounts, is only the latest example of predictions for the death of the bond market being premature. And investors have returned to them. More than $100 billion flowed into bond funds during the first three months of 2017, double the pace of last year’s start, according to the Investment Company Institute. But it’s important to keep expectations for future returns in check. Today’s low rates mean bonds are producing less in income. And despite what’s happened this year, virtually everyone agrees that prices for bonds are more likely to weaken than to rise in upcoming years. That’s because bond prices move in the opposite direction of their yields, and most everyone expects yields to rise, eventually. THE RECOVERY Bond funds got slapped last November by a swift rise in interest rates after Republicans swept the White House and Congress. The thought was that tax cuts, a big infrastructure spending package and other changes in Washington would lead to faster economic

32 • JUNE 2017 • MN Valley Business

growth, higher inflation and increased borrowing by the federal government. Each of those tends to push rates higher, and thus bond prices lower. The yield on the 10-year Treasury jumped above 2.60 percent by mid-March from 1.85 percent on Election Day. But rates began sinking shortly thereafter. One big reason: Republicans’ difficulty in overhauling the health care system, something they had been promising to do for years. The market’s thinking flipped to: If they have trouble with that, maybe tax cuts, infrastructure spending and the other potential changes that drove up rates wouldn’t happen. Longer-term interest rates tend to correlate with expectations for economic growth and inflation, and the 10-year Treasury yield has fallen back to 2.35 percent. THE SPLIT OPINION While the bond market’s expectations for economic growth have ratcheted back, stock investors are still optimistic and the Standard & Poor’s 500 index remains close to its record high. It’s a dichotomy that’s drawing more attention. Erin Browne, head of macro investments at UBS Asset Management, leans more to the stock market’s side. “Yields are too low based on the pickup we’re starting to see in the economy,” she said. “People largely right now are buying bonds at the wrong time.” Browne doesn’t think rates will go back to where they were before the Great Recession, when the 10-year Treasury had a yield of more than 4 percent, for a while. But she does expect them to rise because economies around the world finally seem to be in sync and moving forward. “This is the first year, really since the global financial crisis, where you have all countries contributing to global GDP growth,” Browne said. MV

Sponsored by the Carl & Verna Schmidt Foundation

Nearly ever yone is below average investing in funds By Stan Choe | Associated Press

t’s the world where investors try to pick which mutual funds will beat the market. It sounds great in theory, but the odds of doing it successfully over the long term can be slimmer than winning a lotto prize. Twice each year, S& P Dow Jones Indices checks how fund managers are performing against indexes in various categories. For the first time, it has a full 15 years of data to compare. That stretch of time captures not only two big rallies for the stock market (2002-07 and 2009 to today) but also the worst downturn since the Great Depression (2007-09), which means it should offer a look at the full breadth of a manager’s skills. Most funds did poorly relative to their index, and not just ones that focus on U.S. stocks, whose performance has been getting the heaviest scrutiny. The majority of bond funds and foreign stock funds also failed to keep pace with their indexes for the 15 years through 2016. The natural reaction after seeing such numbers is to give up on funds that try to beat the index, and investors are doing just that, by the billions of dollars. But that may be confusing cause and effect a bit. First, the numbing numbers: For the kind of investment that forms the backbone of most 401(k) plans, less than 8 percent of funds that invest in stocks of big U.S. companies matched or beat the Standard & Poor’s 500 index. Success was even more elusive in other categories. The S& P 600 Growth index did better than all but one of the 175 small-cap growth stock funds available 15 years ago. That’s a success rate of just 0.6 percent. Chances are better for winning one of the prizes in the Powerball game, where the odds are 1 in 25, or roughly 4 percent. One big reason is that many funds simply disappear over time. More than half of all U.S. stock funds either merged with another one or shut down due to poor performance, lack of interest or other reasons over

the 15 years of the study. Another big reason is fees. Funds that charge high expenses must perform that much better just to match the index’s return, let alone beat it. And while the cost of investing has been trending lower, hiring a team of managers and analysts to scrutinize corporate balance sheets still carries a price tag. Schwab has a fund that tracks the S& P 500 with an expense ratio of 0.03 percent, for example. That means $3 of every $10,000 invested goes to paying expenses annually. Many funds that try to beat the index have expense ratios above 1 percent. That extra cost is close to the difference in performance between many actively managed funds and their benchmark indexes. The S& P 500 returned an annualized 6.7 percent over the 15 years through 2016, for example. Returns for large-cap U.S. stock funds were 1 percentage point lower, on average. Paul Greene is one of the outliers. He’s the portfolio manager atop the T. Rowe Price Media & Telecommunications fund, which has returned more over the last 15 years than any fund that doesn’t use borrowed money to juice its returns. His fund makes big investments in Amazon.com, Facebook and a few other stocks – more than half of his fund is invested in just 10 companies – with the intent of holding them for many years. “We may not win every race, but if that happens, I don’t get off and shoot the horse,” he says. “If we think we can keep winning races at an above-average level, we want to stay with it because it’s really hard to win races.” The key, in the end, may be more about keeping costs low than in picking an index fund over one that tries to beat the market. It puts a lighter burden on a fund at the starting gate. Morningstar rates expenses at Greene’s fund as low, for example. MV

MN Valley Business • JUNE 2017 • 33

City Center Partnership’s

BUSINESS WALK

Greater Mankato Growth

n April 25, volunteers from the City Center Partnership’s Business Development Committee helped launch the Business Walk, a “best practice” for Business Retention and Expansion from the International Economic Development Council (IEDC). The Business Walk is pretty much what it sounds like. Trained volunteers visit with business owners about their business, learn about their products and services, and compile any ideas or concerns. Greater Mankato Growth staff follows up and connects the business owner to the appropriate resource. The mission of City Center Business Walks is to provide an opportunity for City Center Partnership staff and volunteers to regularly engage with business owners in order to thank them for their investment in the City Center, provide information on available resources and gauge the City Center business climate. The most important aspect of the visit is the “Thank You.” This simple gesture works toward promoting

34 • JUNE 2017 • MN Valley Business

an environment of entrepreneurialism by recognizing and celebrating business success. Each business was provided a Marketplace Analysis of the City Center that includes a list of resources for business owners. By having a compiled list of resources businesses can be better connected and implement growth strategies. And growth of existing businesses has the highest return on investment. The IEDC estimates that 80% of a community’s economic growth can come from existing businesses versus the recruitment of new businesses. Over the coming year, Business Walks will be scheduled for different neighborhoods of the City Center. Neighborhoods will receive a letter which shares when the volunteers will be in their neck of the woods.

If you’re interested in a visit from Greater Mankato Growth staff to talk about resources or information, please email jconsidine@greatermankato.com

ENEWS: MEMBER ADS Promote your business and special offers in the Member-2-Member section of GMG’s eNews, emailed every Tuesday to 2,500+ business representatives. • • •

Includes 45 words (including the title line) A link out to your website on any portion of the text copy One image can be submitted with your ad

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

Greater Mankato Growth MN Valley Business • JUNE 2017 • 35

Growth in Greater Mankato RIBBON CUTTING

NEW BUSINESS

RIBBON CUTTING

Cricket Wireless Authorized Retailer 111 Star Street, Mankato

Every Body Massage 151 Good Counsel Drive, R333, Mankato

Habitat for Humanity ReStore 1730 Bassett Drive, Mankato

NEW BUSINESS

NEW OWNERS

Kato Music Lessons 630 North Riverfront Drive, Suite B, Mankato

Mankato Vintage Market 1630 North Riverfront Drive, Mankato

Midtown Tavern 524 North Riverfront Drive, Mankato

RIBBON CUTTING

NEW LOCATION

South Central College - Photography Studio 1920 Lee Boulevard, North Mankato

Wilcon Construction Services 209 South 2nd Street, Suite 100, Mankato

Greater Mankato Growth

Cavaliers

Cavalier Calls on the Newest Greater Mankato Growth Members

Chris’ Tailor Shop 201 Victory Drive Mankato christailorshop.com

MedExpress Urgent Care 921 Madison Avenue, Mankato medexpress.com

Q InfoTek Inc. 2144 Hoffman Road, Mankato qinfotek.com

SouthPoint Financial Credit Union 1800 Commerce Drive, Suite A, North Mankato southpointfinancial.com

Stages of Change Center, LLC 100 Warren Street, Suite 335 Mankato stagesofchangecenter.com

Jonny B’s on the Plaza 12 Civic Center Plaza, Suite 1675, Mankato facebook.com/Jbsotp/

36 • JUNE 2017 • MN Valley Business

5:00 - 7:00 pm June 6 July 11 August 1 September 5 October 3 November 7 December 5

7:30 - 9:00 am

KEYC News 12 and Fox 12 Mankato (held at the Kato Ballroom) Unique Specialty & Classics Snell Motors Cambria MRCI - East Park Mayo Clinic Heath System Courtyard by Marriott Hotel & Event Center

April Business After Hours hosted by Body Concepts, Discover Chiropractic, Hatanpa Insurance

June 21 July 19 August 16 September 20 October 18 November 15 December 20

Advanced Pain Management AT&T Blethen, Gage & Krause Ecumen Pathstone Living True Facade Pictures Old Main Village City of Eagle Lake

2017 Business Before Hours Sponsored by:

April Business Before Hours hosted by M2 Lofts

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

Presented By:

Each Thursday in June, 11:00 am - 1:00 pm Civic Center Plaza, Mankato

Admission is FREE

Lunch/snacks will be sold by a variety of local vendors Parking available throughout the City Center #KatoSongs

June 1 - City Mouse (Classic rock, Americana, Country, and Bluegrass) June 8 - The Bad Companions (Rockabilly) June 15 - Sawyers Dream (70’s styled pop rock band) June 22 - The Whiskies (Acoustic Rock) June 29 - The Gentlemen’s Anti-Temperance League (Up-tempo, swing jazz)

2017 Sponsors:

Special thanks to: Verizon Wireless Center, City of Mankato, Children’s Museum of Southern Minnesota and Mankato Family YMCA

MN Valley Business • JUNE 2017 • 37

Greater Mankato Growth

Greater Mankato Growth is proud to announce the 14th Annual Songs on the Lawn - featuring music, entertainment and local food

A SUMMER OF ARTS + CULTURE IN MANKATO’S CITY CENTER

By Katie Adelman, Marketing and Communications Coordinator

hether your business assists seasonal travelers in finding things to do or you and your family want a much-needed stay-cation, Mankato provides the perfect cultural retreat. And it’s all so close! In the heart of Mankato is its vibrant downtown district called City Center Mankato, which is where visitors and locals alike will find a summer full of fun.

Greater Mankato Growth

ART

Because the weather is nicer, art can be experienced outdoors. Up first is the CityArt Walking Sculpture Tour. Venture through the walkable tour of 25+ sculptures in a variety of mediums on your own or take advantage of the free guided tours the first Saturday of each month from June through October. Stroll through City Center Mankato and North Mankato while learning about the sculptures’ artists and the inspiration for each work. The CityArt viewing season is every May through April, when the sculptures are rotated. Vote for your favorite piece and it may stay permanently in the community.

MUSIC

If a more toe-tapping experience is what you seek, there is always live entertainment in the City Center. Places like Pub 500, The Coffee Hag, Curiosi-Tea House, The Square Deal, Spinners Bar & Grill and many more showcase local talent weekly. Riverfront Park’s Vetter Stone Amphitheater features national acts all summer-long; artists like George Clinton & Parliament Funkadelic, Alice Cooper and Brit Floyd are booked for the 2017 outdoor concert season. Songs on the Lawn every Thursday in June is a time for family, friends and coworkers to enjoy a lunch break together and be entertained with live music (see previous page for details). Summer nights after work are meant for relaxing as well. One way to do that is to go to Alive After

38 • JUNE 2017 • MN Valley Business

5, each Thursday in August. So bring your lawn chairs or blankets and enjoy an evening out in City Center Mankato.

EVENTS

Want more than just music? Try the June 23-25 Solstice festival, which is packed with local and regional musicians and artists as well as craft and food vendors. Bring your coolers, sunglasses and lawn chairs and enjoy the afternoon. Red, Hot, Boom is Mankato’s family-friendly July Fourth celebration. This free event includes live music, choreographed fireworks display and additional fun. What started as a small music festival on a gravel parking lot, Blues on Belgrade held July 22, is now a day full of blues music, food and fun. Indulge in sticky delights from award-winning rib chefs and stay for national acts like Travis Tritt and Pat Benatar at Ribfest, held August 3-6. Take a step back in time to an era when horse-drawn trolleys were operating on Mankato’s streets. Deep Valley Homecoming, June 24-25, is a celebration of local author Maud Hart Lovelace, the creator of the Betsy-Tacy book series. Witness living history re-enactments or take part in a 1900-era fashion show or a Victorian tea. For more details on these great City Center attractions and events, go to visitmankatomn.com. For a comprehensive list of events in Mankato, be sure to check greatermankatoevents.com.

+ The Other Extreme by Tim Adams

NEW 2017 Sculptures An Angel Anchored in the Art Nouveau by Ben Hammond

Jam’n Eggs by Kimber Fiebiger

Between now and October 31, tourgoers are encouraged to vote for their favorite sculpture. The piece with the most votes will receive the People’s Choice Award and will be purchased for display in the City Center, joining previous winners Reading Magic, Guidance, Saturday Distractions, Green Sea Turtles, Godzilla and Stand for the Flag in the permanent collection.

Curler Pete by Dale Lewis

CityArt is a joint initiative of the City Center Partnership and Twin Rivers Council for the Arts to bring free and accessible public art to the community; the Walking Sculpture Tour is the backbone of this program. CityArt also curates the public art tour and created the CityArt On the Go exhibit that includes colorful murals on the infrastructure of traffic signal boxes and the Mankato Flood Wall Mural (Mni Mural.) CityArt initiatives are generously supported by local businesses, organizations and the Cities of Mankato and North Mankato. More than 50 sponsors come together to give the community the Walking Sculpture Tour each year! Visit cityartmankato.com to learn more, download a map and vote for the People’s Choice award. The sculpture that receives the most votes will be purchased by CityArt for permanent installation in the City Center.

MN Valley Business • JUNE 2017 • 39

Greater Mankato Growth

arly on the morning of May 13, CityArt staff and volunteers installed the seventh CityArt Walking Sculpture Tour in the City Center of Mankato and North Mankato. This year’s tour offers 27 sculptures of various subjects, sizes and materials – everything from dinosaurs to people to interactive pieces. Each year, thousands of residents and visitors view the tour, which has brought more than 200 sculptures to our community over the past seven years.

The Butterfly Dress by Kyle Fokken

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call 800.949.4444 today and visit rtjgolf.com to learn more.

Our commitment to the community

Healthy communities mean healthy patients, employees, families and friends. At Mayo Clinic Health System in Mankato, we have nearly 3,000 employees, providers, volunteers and physicians whose dedication, expertise and community involvement ensure that residents in the communities we serve have access to expert, whole-person care. In 2016, we invested more than $180,000 in community-based health and wellness programs, including local Relay for Life events, United Way, YWCA Girls on the Run, Project for Teens and many others.

Employees volunteered more than 2,670 hours in 2016 with nonprofit organizations in the Mankato area, including BackPack Food program, YMCA mentoring, Kiwanis Holiday Lights, American Heart Association and many others.

mayoclinichealthsystem.org MN Valley Business â&#x20AC;˘ JUNE 2017 â&#x20AC;˘ 41

Forward thinking,

Mankato minded. Join us for our Grand Opening June 20, 2017 9 am – 7 pm

Enjoy door prizes, food and beverages at our new, state-of-the-art facility in Mankato. bankvista.com

Member FDIC Equal Housing Lender

1501MN Adams Street | Mankato, MN•56001 Valley Business • JUNE 2017 42