Mnvalley 7 13 by Free Press Media

Building is booming Contractors see strong demand return RW Carlstrom Construction built the new Mankato Public Safety Center. From left: Danny Umhofer, Scott Umhofer, Jeremy Hatlevig and Dan Gjerde.

Also in this issue • Arnie’s Sales & Service • Taj Mahal Indian Cuisine • Broad Street Brick & Patio

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F E A T U R E S July 2013 • Volume 5, Issue 10

Tony Frentz, like other local contractors, is busy this summer.

Taj Mahal Indian Cuisine

Tony Bassi, the 35-year-old manager of Taj Mahal Indian Cuisine, started his restaurant career after high school when he went to work for his father.

Arnies Sales & Service

Arnie and Eileen Wadekamper have made their way by juggling a number of businesses including lawn mower sales, snowplowing, selling firewood and making maple syrup.

Broad Street Brick & Patio

Connie Hoffman found a niche in the local market in 1989 when she opened Broad Street Brick & Patio. Today her son Chad helps run the business.

MN Valley Business • july 2013 • 5

■ July 2013 • VOLUME 5, ISSUE 10 PUBLISHER James P. Santori EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Pete Steiner David Olson Kent Thiesse Marie Wood PHOTOGRAPHERS Pat Christman John Cross COVER PHOTO Pat Christman PAGE DESIGNER Christina Sankey ADVERTISING David Habrat MANAGER ADVERTISING sales Karla Marshall 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 kmarshall@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 ■ Agriculture Outlook...................... 32 ■ Agribusiness trends..................... 33 ■ Job trends..................................... 34 ■ Construction, real estate trends.. 35 ■ Retail trends................................. 36 ■ Greater Mankato Growth.............. 38 ■ Greater Mankato Growth Member Activities ....................... 40

6 • july 2013 • MN Valley Business

From the editor

By Joe Spear

Economy rises with building

ommercial and residential construction appear to be on the cyclical upswing again in the Mankato area. Many of the contractors we talked to this month indicate the upswing is driven by some pent up demand and decent interest rates. They also report a few challenges getting to work in a timely manner. There are some waiting lists. Construction in the Mankato region stands as one of the key industries, but also one that fluctuates more than others.. A look at construction payroll in Blue Earth County in 2012 (latest year available) shows it usually is smaller in the first quarter (about $14 million), grows in the second quarter as the weather improves (to $18 million or a gain of 28 percent from first quarter), rises further in the third quarter ($21.6 million) and declines, though slightly, in the fourth quarter ($20 million). So we’re right in the middle of the seasonal rise. From 2010 to 2012, construction wages rode a little bit of a roller coaster from $74 million in 2010, $77 million in 2011 and slipping a little bit back to $74 million in 2012. That is the nature of a cyclical industry. Contractors seem to understand this and usually diversify their operations. When new building tails off, they move to remodeling. The construction industry in both Blue Earth and Nicollet counties make up 4 percent of the total wages with annual payroll of about $81 million. While the industry may not represent a major portion of the area’s employment, it suggests a certain amount of economic activity that makes a big difference. The construction industry follows the level of major investments businesses and consumers are willing to make. And when businesses and consumers are willing to make large investments in business buildings or homes, it suggests a certain level of business and consumer confidence. So, just as we heard from auto

dealers last month about fairly strong gains in car buying – another major investment – now we hear from contractors about business and consumer investment in bricks and mortar. With Minnesota State University in Mankato and the St. Peter Regional Treatment Center campus in St. Peter, the Mankato region will also benefit from bonding bills likely to go through the Legislature next year. Mankato’s civic center, by many accounts, is finally likely to get its $10 million to $14 million investment it has been politely requesting for almost a decade. Road projects also count as construction, and Mankato has a hefty share of those as well. Some $14 million will come into the Highway 14 project from North Mankato to Nicollet. Another $8 million to $10 million is coming for a Highway 169 project to raise the highway between Mankato and St. Peter as part of flood avoidance. Construction also is expected to start this fall or early next year on the Walmart Distribution Center that is expected to have a 16-20 month construction period. Construction spawns a lot of other economic activity from the truckers who need to haul building materials to the out-of-town workers who sometimes stay at hotels and patronize other eating and drinking establishments. It’s what economists call the multiplier effect. A study of condominium projects in Toronto showed that construction can have a multiplier effect of $17 to $1, meaning for every $1 invested, $17 is returned to the economy. So while the local construction industry may be a smaller part of the overall economy, its impact can be very large.

Joe Spear is executive editor of Minnesota Valley Business. Contact him at 344-6382 or jspear@mankatofreepress.com

Local Business People/Company News

■

AMPI communicators honored Communicators for Associated Milk Producers (AMPI) earned top awards from the Cooperative Communicators Association. The team of graphic designer Nickie Sabo, communications director Sarah Schmidt and executive senior vice president Sheryl Meshke was recognized. Sabo received the 2013 Michael Graznak Award, recognizing a communicator age 35 or under who exhibits promise as a young communicator. Meshke is the recipient of the 2013 H.E. Klinefelter Award, CCA’s highest honor for a career cooperative communicator. ■■■ WOW ZONE! owners honored The Bowling Proprietors Association of Minnesota has named Pam and Doug DeMarce, owners of the WOW! ZONE, as the 2013 BPAM Proprietors of the year. The award is presented to a proprietor who has been nominated by the state association for outstanding contributions to the industry and sport of bowling. The couple also own Victory Bowl. In the last five years they have grown their junior bowling program, added boys and girls high school bowling, a home school bowling program, and a summer day camp for children. ■■■ Reed joins Courtyard by Marriott Jill Reed is the new Corporate Sales Manager at Courtyard by Marriott Mankato, located next to River Hills Mall. Reed has worked in a similar position in other area hotels. ■■■ Dobie’s Repair sold The Muffler Center and Dobie’s Repair has been absorbed by Nick’s Car Care. Owen “Dobie” Painter had been in business since 1983. Nick Zuehlke of Nick’s Car Care has been in business for more than two years. ■■■ CAB gets certification CAB Manufacturing has been awarded certification as an AISC (American Institute of Steel Construction) company. AISC’s certification programs set the quality standard for the structural steel industry and is the most recognized national quality certification program for the industry.

New shareholders at I&S I&S Group announced five new shareholders. Andy Brandel is a professional civil engineer in the Faribault office. Bill Goldy serves as a community resource planner and business development executive for I&S. Nick Ellenberger provides both structural design and project management services from the La Crosse office. Tom Grafft is an environmental systems coordinator based out of the Storm Lake, Iowa office. Joey Wendinger is an experienced project manager with significant experience in the health care industry, hospitality industry, and large projects. ■■■ Pope passes engineering exam I&S Group announced that Josh Pope passed the Principals and Practice of Engineering Examination, thereby officially designating him a professional engineer. He graduated from St. John’s University and the University of Minnesota and started at I&S in 2011. ■■■ Duncanson elected to corn council Minnesota’s corn farmers elected Karl Duncanson of Mapleton to the Minnesota Corn Research & Promotion Council. He is new to the council and replaces retiring council member David Ward, who farms near Mapleton. Duncanson grows corn, soybeans and peas and raises hogs and horses. ■■■ Sowers honored by U.S. Bank Bryan Sowers, U.S. Bank vice president in Mankato, has won U.S. Bank’s Pinnacle Award, the company’s highest employee achievement honor. He was among a group of top performing employees nationwide to win the award. This is Sower’s fourth Pinnacle award. ■■■ Sarameh passes CPA exam Eide Bailly announce that Yousef Sarameh has passed the Certified Public Accounting exam. Yousef earned his degree in accounting from Minnesota State University in 2012. He was an intern at Eide Bailly before being hired full time. ■■■

MN Valley Business • july 2013 • 7

Palmer heading national wheat board Jim Palmer has been named as chief executive officer of the National Association of Wheat Growers and the executive director of the National Wheat Foundation. Palmer has more than 30 years of experience managing agriculture industry organizations at the state and national levels, having spent most of his career working for soybean farmers. From 1997 until early 2012, he worked as the executive director for the Minnesota Soybean Growers Association and the Minnesota Soybean Research and Promotion Council, headquartered in Mankato. ■■■ Abdo, Eick & Meyers merges Abdo, Eick & Meyers is merging with Francis & Associates effective in November. Abdo employs more than 70 accounting professionals in offices located in Mankato and Edina. Francis & Associates began in 1978 in Minnetonka. ■■■ Geerdes promoted at Lime Valley Lime Valley Advertising promoted Marissa Geerdes to director of administrative services. She will oversee and direct Lime Valley’s administrative operations including accounting, human resources and client relations. She joined the company in 2002.

Call named CFO at MRCI MRCI WorkSource has hired Jeff Call as the Chief Financial Officer. Call will report to MRCI CEO Brian Benshoof. The CFO provides financial leadership over the organization, which had a $58 million budget last year. He replaces Charles Juntunen, who retired in May. Jeff Call

Hart named to Harvard Institute class Marilyn Hart, a professor of biological sciences and director of the Undergraduate Research Center at Minnesota State University, has been selected to be a member of the Harvard Institutes for Higher Education Management Development Program Class of 2013. The two-week program is a professional education program offered by the Harvard Institutes for Higher Education through the Harvard Graduate School of Education. The Management Development Program prepares attendees to become better leaders and more valuable contributors to broader institutional goals. ■■■ Mankato native honored in Iowa Mankato native, and 1994 Loyola graduate, Catherine Fields is one of five ‘Outstanding Young North Iowans’. Fields, of Mason City, is a small business owner.

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Marissa Geerdes

Pawlitschek named to President’s Club Ben Pawlitschek, a licensed prearrangement specialist with Laker Planning, was recently recognized by Funeral Directors Life Insurance Company as a new member of the FDLIC President’s Club. Membership in the President’s Club is extended only to sales professionals who have achieved the highest levels of performance with the company. ■■■ AgStar has strong first quarter AgStar Financial Services reported net earnings for the first quarter ending March 31, 2013. The company had net after-tax earnings of $24.8 million, an increase of $914,000 over last year’s first quarter performance. ■■■

8 • july 2013 • MN Valley Business

■■■

Catherine Fields ■■■ Steichen honored at U.S. Bank Frank Steichen, southwest district manager for U.S. Bank in Mankato, has won U.S. Bank’s Pinnacle Award, the company’s highest employee achievement honor. Steichen was among the top 10 percent of top performing employees nationwide to win U.S. Bank’s award for outstanding achievement and superior performance. This is Steichen’s second pinnacle award.

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.

■

Business and Industry Trends

Economy

Energy

Recent economic indicators have been mixed. The U.S. Bureau of Economic Analysis reported that real gross domestic product (GDP) increased at an annual rate of 2.5 percent in the first quarter of 2013 (that is, from the fourth quarter to the first quarter). This was well above the 0.4-percent growth in the final quarter of 2012, but below the expectations of many forecasters. Consumer spending and residential investment showed strong gains, while net exports and government expenditures showed quarterly reductions. The U.S. Census Bureau reported that new orders for manufactured durable goods fell 5.7 percent From February to March, following a 4.3-percent increase from January to February. Industrial production rose by 0.4 percent in March after having increased 1.1 percent in February according to the Federal Reserve.

Falling crude oil prices contributed to a decline in the U.S. regular gasoline retail price from a year-to-date high of $3.78 per gallon on February 25 to $3.52 per gallon on April 29, according to the federal Energy Information Agency. Regular gasoline prices should average $3.53 per gallon over the summer (April through September), which is slightly lower than previous estimates. The annual average regular gasoline retail price is projected to decline from$3.63 per gallon in 2012 to $3.50 per gallon in 2013 and to $3.39 per gallon in 2014.

U.S. economic trends mixed

GDP growth 1.8 percent

There should be 1.8 percent U.S. real GDP growth in 2013, rising to 2.7 percent in 2014. Year-on-year real GDP growth begins to accelerate in 2014, eventually rising to 3.0 percent in its final quarter. Forecast real disposable income increases 0.9 percent in 2013 and 3.4 percent in 2014. Total industrial production grows at a faster rate than real GDP in 2013 and 2014, at 3.0 percent and 2.9 percent, respectively.

U.S. income and expenditures

Private fixed investment growth averages 6.7 percent and 8.2 percent over 2013 and 2014. This is driven partly by business equipment and software spending, as well as increasing expenditures on buildings. Real consumption expenditures grow faster than Real GDP in 2013, at 2.1 percent, but slow below the rate of real GDP growth in 2014, at 2.3 percent. Export growth nearly doublesfrom2.6 percent to 5.1 percent over the same two years.

Gas prices fall nationally

Crude oil prices fall

After increasing to $119 per barrel in early February, the Brent crude oil spot price fell to a low of $97 per barrel in mid-April and then recovered to $105 per barrel on May 3. EIA expects that the Brent crude oil spot price will average $104 per barrel over the second half of 2013 and $101 per barrel in 2014.

Natural gas inventories lower

Natural gas working inventories ended April 2013 at an estimated 1.82 trillion cubic feet, about 0.80 Tcf below the level at the same time a year ago and 0.13 Tcf below the five-year average. EIA expects the Henry Hub natural gas spot price, which averaged $2.75 per million British thermal units (MMBtu) in 2012, will average $3.80 per MMBtu in 2013 and $4.00 per MMBtu in 2014.

More electricity from Coal

The projected increasing cost of natural gas relative to coal contributes to higher levels of electricity generation from coal. The share of total generation fueled by coal is forecast to increase from37.4 percent in 2012 to 40.1 percent in 2013. Conversely, the share of generation fueled by natural gas declinesfrom30.4 percent in 2012 to 27.8 percent in 2013.

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MN Valley Business • july 2013 • 9

Minnesota Business Updates

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■ Xcel reduces carbon emissions Xcel Energy in 2012 increased energy efficiency, reduced emissions and renewable energy according to the company’s annual Corporate Responsibility Report. Through the combination of conservation, renewable energy and power plant improvement projects, Xcel reduced its carbon emissions by 18 percent since 2005. Carbon reduction is projected to reach 27 percent by 2020. Xcel Energy increased its use of wind energy 20 percent, adding more than 1,000 megawatts of wind power to its system in 2012. The American Wind Energy Association ranked Xcel Energy the No. 1 wind power provider in the United States for the ninth consecutive year. Solar energy grew on Xcel Energy’s system by about 30 percent in 2012. Customers set a record for energy conservation for the third year in a row by taking advantage of Xcel Energy’s energy efficiency programs.

■ ADM distributing sweetener in Asia, South America Archer Daniels Midland Co. will become the exclusive distributor of certain sweetener and lysine products manufactured by Global Bio-chem Technology, to various markets in Asia and South America under a strategic alliance agreement. The market territory for the sweetener products will include various Southeast Asian countries, the Far East, Australia and New Zealand. Decatur-based ADM maintains several regional sales offices in that part of the world. Global Sweeteners, which is listed on the Stock Exchange of Hong Kong, has annual production capacity of 1,200,000 tonnes of upstream corn refined products and 1,360,000 tonnes of corn sweeteners. The company produces and sells corn-refined products (including corn starch, corn oil, gluten meal and fiber) and various corn sweeteners.

■ Best Buy to host Windows stores Richfield-based Best Buy Company, Inc., announced Thursday that it has partnered with Microsoft Corporation to add small, in-store Windows shops within roughly 600 Best Buy locations, according to Twin Cities Business. The Windows mini-stores will provide consumers with a place to test, compare, and purchase Windows-based tablets, PCs, phones, accessories, and Xbox consoles. It will provide one-stop shopping for Windows products, rather than having them scattered throughout the store. The alliance will also result in the addition of more than 1,200 Microsoft-trained sales associates that will be stationed in the mini stores for customer assistance. The concept will be rolled out from late June through

10 • july 2013 • MN Valley Business

September. The two companies also launched a website that they hope will mirror the in-store experience, while also highlighting store locations, promotions, and joint marketing efforts.

■ Target earnings below expectations Target Corp. posted a lower-thanexpected earnings performance for the first quarter of fiscal 2013. The company said that soft sales and weather related categories affected its results. The company reported an income of $498 million or $0.77 per share for the first quarter. During the same period last year, Target reported a profit of $697 million or $1.04 earnings per share. According to the company, its adjusted earnings per share for the first quarter was $1.05, a decline of 5 percent from $1.11 in the same period in 2012. Target said that its current results include losses related to the early retirement of debt of $0.41 per share, EPS dilution of $0.24 related to the Canadian segments, and net accounting gains of $0.36 related to the sale of the company’s entire consumer credit card receivable portfolio to TD Bank Group. In a statement, Gregg Steinhafel, chairman, president, and CEO of the company said, “Target’s first quarter earnings were below expectations as a result of softer-than-expected sales, particularly in apparel and other seasonal and weathersensitive categories.

■ General Growth eyes New York property General Growth Properties has paired with Brookfield Office Propertiesto bid for an expensive New York building in what could mark the No. 2 U.S. mall owner’s entry into a new segment of the retail estate market, according to two sources familiar with the deal. Bids for the 27-story office and retail building at 650 Madison Avenue, one of the toniest shopping and office districts in Manhattan, could exceed $1.3 billion, the sources said. Other bidders include Vornado Realty Trust one of the sources said. The decision on the winning bid is expected next week, the source said. Eastdil Secured is brokering the sale of the building, which is owned by private equity firm Carlyle Group. General Growth, Carlyle and Brookfield declined comment. Vornado and Eastdil did not respond to requests for comment. General Growth’s interest in the building surprised industry executives. The company has long focused on operating malls and buying the New York building would mean a foray into what is known in the industry as urban street-level retail real estate. Unlike malls whose popularity grew with the rise of U.S. suburbs as destinations that people typically drive to for shopping, the New York building has space for a handful of stores in a shopping and office district in the middle of the city.

PLANNING INTERIORS | ARCHITECTURE | ENGINEERING |

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The LEED速 Certification Mark is a registered trademark owned by the U.S. Green Building Council速 and is used with permission.

■

Business Commentary

By David Olson

Dayton, lawmakers should have done better for businesses

ov. Mark Dayton and legislative leaders convened in January with a common goal of “progress for Minnesotans on education, job creation and better government.” Four months later, the Legislature’s adjournment left more questions than achievements. Why are teachers not required to pass a basic skills test before entering classrooms? Why are we raising taxes on smallbusiness owners? Why are we expanding government with little or no attention to spending reform and redesign? The cumulative impact of the Legislature’s votes is certain to negatively impact businesses and families alike. Minnesotans should collectively ask our elected officials: “Why?” Then impress upon them: We can do better. The governor pledged to balance the budget by making the rich “pay their fair share” to protect the middle class. In the end, the tax/spending package delivered a double whammy. In addition to high wage-earners, the state’s 20,000 small and midsized business that pay their business taxes through their individual income tax will now pay among the highest taxes in the nation. Why did lawmakers hike taxes on businesses to a level much higher than neighboring states, putting Minnesota companies, especially in border communities, at an extreme competitive disadvantage? The top income tax rate is now the fourth highest rate in the nation. The corporate rate is third highest, and the cigarette tax ranks sixth. Why did the Legislature enact

business-to-business sales taxes that will impact the agricultural and manufacturing communities, among others? Sales tax will be applied to

care premiums? An exchange operated by the private sector could have achieved the same goals at far lower cost. Why did we need to raise solar energy standards and increase electricity costs for businesses and residences? Minnesota already has one of the most aggressive renewable energy mandates in the nation. Why are Minnesota students no longer required to pass a high school graduation exam? Our kids deserve a solid foundation for lifelong success, and Minnesota employers need a skilled workforce. The Minnesota Chamber and others recommended alternative strategies, but our ideas were ignored. Too often, the singular response to addressing the state’s challenges was to raise taxes and grow government. Minnesota cannot afford to return to tax/spend strategies that threaten our economic success. The latest unemployment figures show the state’s job growth now lags behind the national rate. As neighboring states are erecting billboards on our borders welcoming business and jobs, what message is Minnesota sending? It’s time to ask our elected officials: Why? Then tell them: We can do better. MV

“As neighboring states are erecting billboards on our borders welcoming business and jobs, what message is Minnesota sending?”

12 • july 2013 • MN Valley Business

labor costs for repairs and equipment. The telecommunications equipment sales tax will make it more expensive to supply broadband and technology that is critical for rural areas to compete and thrive. The tax on storage and warehousing could devastate this industry’s ability to compete in Minnesota and will result in sales tax on storage of agricultural inputs, too. Why did we need to create another state agency with nearly 100 fulltime employees to manage the new health insurance exchange — at a cost of $60 million that will be financed entirely by a tax on small businesses and individuals’ health

David Olson is president of the Minnesota Chamber of Commerce

2013

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MN Valley Business • july 2013 • 13

Tony Frentz at a custom home his firm is building on Lake Washington.

Building boom

Home, commercial construction finally taking off By Tim Krohn | Photos by John Cross and Pat Christman 14 â&#x20AC;˘ july 2013 â&#x20AC;˘ MN Valley Business

his spring has seen the start of one of the busiest construction seasons in recent memory with large housing complexes leading the way and a healthy amount of commercial and new home construction. “Things really took off this year. There’s a lot of work and a lot of bids out there,” said Scott Umhofer, president of RW Carlstrom Construction. “Across the board, municipalities, churches, schools, medical, industrial. All of it. They all slowed down a few years ago, but medical kept us busy. We do quite a bit at Kraft Foods in New Ulm and they kept us busy for a long time,” Umhofer said. Dave Gosewich of Gosewich Construction said they, too, have seen a nice comeback in commercial building. “It’s been slow the last couple of years, but there is an uptick now. We have a little bit of a backlog,” said Gosewich, whose firm does commercial construction. Contractors say the home-construction sector is likewise doing well, including the longstagnant upper-end home building. “Things are really picking up in the higherend residential, the $400,000 and over,” said Rich Weyhe, of R. Henry Construction in Mankato. “We can’t hire enough help right now.” Tony Frentz of Frentz Construction also has seen a bounce back. “You can definitely see in the home market that things have improved. There was a lot of pent up demand and the interest rates are staying low,”

The project will finally bring a permanent connection of Adams Street behind Madison East with construction of the link under way. The project is expected to attract more apartments as well as offices, restaurants and other businesses. The property — owned by the Kearney grandchildren — was purchased in the 1950s by Dr. Wynn Kearney Sr. At the time, the land was part of a 160-acre farm far outside the city of Mankato.

Cover Story

Custom home building back When new home building all but disappeared after the start of the recession, builders had to rely on other types of work. “When the new construction slowed down, the remodeling picked up, so that helped,” Weyhe said. “We were building craftsman architecture when we started and that wasn’t really being done here. People got to know us and we got into remodeling and some commercial, so when the housing went south, we were diversified enough that we weren’t hurt too bad.” Weyhe started R. Henry in 2003 and was doing subcontracting work with Pride Builders, owned by Tim Paulsen and Troy Bramer. They eventually merged under the R. Henry name. While construction is coming back, one problem faces people seeking financing for new home construction – getting appraisals. Before giving a loan, banks find “comparable” properties to see what their value is and determine whether the size of the loan they approve is justified. “People were having some trouble because they have to find comparable homes and there wasn’t any building in the last few years, so there weren’t any comps to look at,” Frentz said. “The banks are looking for recently built houses that were sold or they at least look at what it cost to build them. There just weren’t many of those to look at,” he said. And Weyhe said that if banks looked at similar homes sold in the past few years to use as a comparison for proposed new construction, another problem arose. “The values on homes were hit because foreclosures were selling for less. It’s a little tougher to get appraisals they can use to justify new building,” Weyhe said.

“Things are really picking up in the higher-end residential, the $400,000 and over. We can’t hire enough help right now.” Rich Weyhe, R. Henry Construction

Two major projects beginning Two of the most anticipated projects are a major office and residential development in downtown Mankato and the development of a large tract of land behind Madison East Center. Tailwind Group is kicking off a $16 million transformation of South Front Street, building a seven-story glass office tower on the corner of Riverfront Drive and Warren Street as well as a five-story apartment and commercial building on South Front. For the latter building, Red Sky Lounge and Miller Motors will be razed with the businesses relocating. City and state grants will finance a $5 million parking ramp in the same block. The Kearney family project behind Madison East will begin with 172 high-end apartments on part of the 35-acre parcel.

MN Valley Business • july 2013 • 15

The new Mankato Public Safety center is one of many big projects RW Carlstrom has handled in recent years. From left: Danny Umhofer, Scott Umhofer, Jeremy Hatlevig and Dan Gjerde. Still, those building spec homes and custom-designed “The kitchen is by far the No. 1 thing,” Frentz said. “If homes are again busy and in some cases finding it more anything, people hang out in the kitchen even more. I see difficult to find suitable building lots or to open new a lot more people doing the living room/sitting room right subdivisions for construction. in with the kitchen. It’s very open, “Land is an issue for new so some people can be in the construction,” Weyhe said. “It’s kitchen and others can be sitting difficult to develop land at a price “People are building a little nearby,” Frentz said. point that works. There’s fewer The dining areas are also more and fewer decent lots around. I casual, the builders say. More smaller houses but better think that’s a trend that’s going to people ditch the formal dining quality. You only need so take a while to resolve itself.” room in favor of large islands in He said developers have to be the kitchen that double as work much space for a family. Ten surface and dining table. careful about buying a tract of bare land, lot it off and put in One thing has changed postyears ago they were building recession. roads and utilities. “The infrastructure costs are “People are building a little really big houses.” high and the lot prices have to smaller houses but better quality. justify a price point,” Weyhe said. Rather than a 6,000-square-foot Tony Frentz, He has been building homes on home it’s a 4,500-square-foot his subdivision between Middle home and making it nicer. You Frentz Construction . Lake Jefferson and Big Lake only need so much space for a Jefferson. family. Ten years ago they were While there are some new building really big houses,” Frentz challenges for builders and wouldsaid. be homeowners, one thing that hasn’t changed is what customers are most interested in when designing their homes.

16 • july 2013 • MN Valley Business

After a dry spell in custom home demand, R. Henry Construction is again busy building custom homes like this one. From left: Tim Paulsen, Rich Weyhe, Rob Paulsen and Troy Bramer. Commercial construction strong Gosewich started building homes in 1977 but soon went fully into commercial/industrial development. His wife, son and daughter all work with him and the company generally works in a 50-mile radius of Mankato. He said that during the recession some sectors, such as the medical industry, helped keep them busier. Now many areas have bounced back. “Medical is good and new churches have been good. We’re doing some renovations at Gustavus this summer and we’re doing the Peter Pan day care in North Mankato. We’re just finishing up a big expansion out at Pioneer,” Gosewich said. “There’s a little work in industrial but not a ton.” Gosewich said his job is far more than constructing a building. “We try to work with clients very early on. With Peter Pan we’ve been working with them for two years on different plans and different locations,” he said. “People appreciate it. A lot of time people will come back with another project later.”

With 40 employees, the 68-year-old RW Construction is one of the largest and oldest firms around. Started in 1945 by Robert W. Carlstrom, it was purchased by his sons, John and Lee, in the 1970s. In 2004 it was sold to John’s son Eian and to Umhofer. Last year Umhofer bought Eian’s share of the business. Now, Umhofer’s partner, Jeremy Hatlevig, is starting to buy into the company. Some of the company’s projects include Heintz Auto, Blue EarthNicollet County Humane Society, St. Peter Evangelical Lutheran Church, Mankato Public Safety Center, St. Peter Community Center, Mayo cardiology center and oncology center and all of the recent buildings at Bethany Lutheran College. “Right now we’re doing the new VINE building and the Open Door Clinic expansion. They’re both really nice projects for the community, very worthy causes with really dedicated people,” Umhofer said. “It’s really nice to see business so active, it’s been a long time coming.”

“It’s been slow the

last couple of years,

but there is an uptick now. We have a little bit of a backlog.”

Dave Gosewich,

MN Valley Business • july 2013 • 17

Dave Gosewich of Gosewich Construction at the site of the new Peter Pan Preschool and Childcare center in North Mankato. Umhofer said the sudden surge in business has left many contractors scrambling to find subcontractors. “It’s been hard getting bids because there’s so much going on now and I think a lot of construction companies cut back and now they can’t keep up.” Umhofer said the biggest changes he’s seen during his career is the advances in building materials and techniques. “There’s just a lot more technology going into buildings today. The green projects where everything is more energy efficient and using recyclable materials.” Gosewich said that while they’re still seeing brick-andmortar construction, many are now using pre-cast concrete and metal. “We’re seeing more where the whole structure is preengineered, pre-manufactured. They do all the siding and roofing and pre-cut everything. We kind of bolt it together on site, but it takes some expertise to do it,” Gosewich said. “With the green building, it seems like we saw more of a push for it a couple of years ago and aren’t seeing it quite as much now. Especially for smaller businesses, sometimes it isn’t as cost-effective up front for them. They want more bang for their buck.” MV

18 • july 2013 • MN Valley Business

“There’s just a lot more technology going into buildings today. The green projects where everything is more energy efficient and using recyclable materials.” Scott Umhofer, RW Carlstrom Construction

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MN Valley Business • july 2013 • 19

Tony Bassi manages Taj Mahal Indian Cuisine in Upper North Mankato.

Bringing India to Mankato Experienced restaurateurs open Taj Mahal By Marie Wood | Photos by John Cross

ony Bassi, the 35-year-old manager of Taj Mahal Indian Cuisine, started his restaurant career after high school when he went to work for his father who owned two Indian restaurants near the University of California, Davis, called Raja’s Indian Cuisine. Sunny Bassi, his younger brother, also worked with their father and followed in his footsteps. Sunny and his best friend, Jason Singh, the head chef at Taj Mahal, secured the capital to open an Indian restaurant in Greater Mankato. They chose the Mankato market, because there were no Indian restaurants here. For three years, the Bassis and Singh looked for a locale, before they moved into the space that once housed Plaza Garibaldi in North Mankato. Now Taj Mahal is the only place in town serving basmati rice, naan, tandoori, fragrant lamb, shrimp, chicken, beef and vegetable curries, as well as other traditional sauces.

“When we open, finally we can open our dream. People are really nice. They say ‘Congratulations. We’re glad you’re here,’” said Sunny. The Mexican décor was easily transformed into an Indian restaurant. Arches painted in warm tones give the space an Eastern vibe while pastoral Indian paintings and sitar music complete the scene. In the kitchen, they installed a clay oven, also known as a tandoor. That’s why the marinated, skewered and roasted meats are called tandoori. “We have lots of customers trying Indian food for the first time,” said Tony. “They can try from any taste, from mild, to medium, to hot.” Since opening in September 2012, the chicken tikka masala made of tandoor-roasted chicken cubes in spices and a creamy sauce has become the most popular dish.

Profile

20 • july 2013 • MN Valley Business

The buffet is a popular way for people to be introduced to Indian cuisine Another favorite is the Taj Mix Grill – a platter of assorted tandoori meats and kebabs. Krissy Latefi of Mankato has become a regular customer, who likes being able to customize her order to her taste. The chicken tikka masala is “YUM” and a big hit with the whole family, said Latefi. “What a great dining addition to our growing Mankato community. The food is delicious, the service is warm and friendly...The lunch buffet is a fabulous intro to try many of the different Indian dishes at a very reasonable price,” said Latefi. Priced at $9.99, people discover and sample a variety of Indian foods at the daily lunch buffet, which includes a soft drink. Meanwhile locals of Indian descent are enjoying a restaurant that serves authentic dishes. “Since we opened, I’ve met four to five professors from India and doctors at the main hospitals,” said Tony. “They love it. They tried it from all over.” From India to here The Bassis and Singh, are from the Punjab region of India. The 21-year-old Singh came to the United States in 2006. Since then, he has lived and cooked in New York, Texas and California. Singh learned to cook in India and created his own recipes for Taj Mahal. “I love cooking,” said Singh. The Bassis sold their Indian restaurants in California and moved to Burnsville, where the family owned and operated a BP station and store. Sunny and Singh also worked at Indian restaurants in the southern metro. Tony, who lives in Burnsville with his wife and two children, is buying a home and moving his family to Mankato. Currently, they rent a place here for themselves and employees. Their younger brother, Banny Bassi, works at Taj Mahal too. There are about 10 employees in all. An experienced restaurateur, Tony owned and operated two Mountain Mike’s Pizza franchises in California. When Sunny and Singh decided to open a restaurant, naturally they offered Tony the manager position. Tony enforces three rules: quality, cleanliness and customer service. “The food business is always successful if you know about food quality. These days people like to see quality, prices and good food,” said Tony. While Tony manages the front of the restaurant including the bar, beverages and servers, Singh, with Sunny as his right-hand man, runs the kitchen. Singh orders the groceries, many through Sysco, while Tony adds supplies and other items. Indian spices and tea come from a distributor in California.

Head chef Jason Singh has cooked at several restaurants around the country. Introducing Indian cuisine When Taj Mahal participated in the International Festival at MSU they brought chicken tikka masala, channa masala which is garbanzo beans in a curry sauce, basmati rice and the Indian flat bread called naan. A young boy tried it, loved it and brought his family here, said Tony. “The customer is great. Every time, they bring more people with them,” said Tony. “The customer response has been great.” Lamb masala and vegetarian dishes such as the palak paneer which is fresh spinach cooked with homemade cheese are often tried on subsequent visits. Taj Mahal offers a full bar and beverages that include Indian beer and homemade masala tea. They also make lassi, a yogurt and water drink that originated in the Punjab region. The house specialty is mango lassi, made with fresh mangos. Tony and his staff are happy to explain the nuances of Indian cuisine from dipping sauces to desserts. Your meal should include naan, the Indian flat bread cooked in the clay oven. Since 70 to 80 percent of the curries contain no flour, many of the dishes are gluten-free. Taj Mahal recently catered an event for 115 guests and take out is going strong too. Since locals are loving Indian cuisine, they plan to open another Mankato location. “We’re going to go for another one next year,” said Tony. “We have great food, great quality, come down, try it.”

MN Valley Business • july 2013 • 21

Special Focus: Make your Business Learn How to Protect the Environment and Save Money ■

By Marie Wood | Photos by John Cross

Environmental Sustainability When you take action to reduce the environmental footprint of your organization, you are practicing environmental sustainability. The basic practice of reduce, reuse and recycle can help companies save money and protect the environment. “The biggest barrier to waste reduction and recycling in small to mid-size businesses is that Jill Curran they’re just really busy. They need a helping hand to get started and on track,” said Jill Curran, executive director for Minnesota Waste Wise. Minnesota Waste Wise helps businesses find ways to reduce, reuse and recycle. Members pay an annual fee structured to meet the service needs of the business. Services include environmental assessments, sustainability consulting and employee education. The first step is an on-site visit to assess your waste hauling and the volume, weight and materials in your waste. Next Waste Wise experts identify opportunities to reuse and recycle and find recyclers for different materials, especially uncommon materials. Most local businesses are already recycling paper, cardboard, cans and plastic bottles. To take the next step, Minnesota Waste Wise can open the conversation with counties, cities, and waste haulers to make more services available. Sometimes Minnesota Waste Wise helps companies change their processes to generate less of materials that are being wasted or recycled. Since employee buy-in is critical to success, Waste Wise offers employee trainings and workshops. “You can start a great recycling program or organize a collection, but if employees are not putting it in the right bin, it’s not going to work,” said Curran. Minnesota Waste Wise is a membership organization that helps businesses save money by reducing waste, conserving resources and improving energy efficiency. Learn more at www.mnwastewise.org. Call 651-292-4650. Full Circle Organics The next wave of recycling is organics. Full Circle Organics, now open in Good Thunder, accepts organics including all food waste, coffee filters, food-soiled paper products, yard clippings and more. The organics are diverted from the landfill to become compost and return to the soil. “Organics as a whole are an asset, not a waste. We reuse

22 • july 2013 • MN Valley Business

the material to make a beneficial product,” said Max Milinkovich, CEO of Full Circle Organics. Full Circle offers 64-gallon carts to restaurants, caterers and other businesses who want to recycle organics. Fill it up and Full Circle will haul it away. Fees based on gallons and pick-ups per week. Waste audits and employee training is provided for companies looking Max Milinkovich (left) David Fitzsimmons to start a (center) and Kevin Fitzimmons unload material c o m p o s t i n g at Full Circle Organics. program. To learn more, visit www. fullcircle-organics. com or email info@fullcircle organics.com. Green Tech Recycling Kash Kahn, who Max Milinkovich checks on compost piles at Full founded Green Circle Organics near Good Thunder. Tech Recycling in Mankato tracks the worldwide recycling market. He accepts electronics, appliances, computers, printers, phones, TVs, fluorescent bulbs, cables, tires, video cassettes and more from businesses across the region. “You’re going to save money by recycling. If you put it in the trash, it will cost you,” said Kahn. Electronics start at 25 cents a pound, but schools only pay 15 cents a pound and businesses can qualify for a lower rate. Kahn pays for items such as lead-acid batteries and wires. For most pick-ups, Kahn doesn’t charge transportation fees. Green Tech Recycling is at 205 W. Spring Street, Mankato, 344-1315 or email kash@recyclemn.com. MV

more Sustainable Resources to help businesses be sustainable

By Marie Wood

ean Lundquist, recycling coordinator for Blue Earth County, can connect you to companies that can reuse and recycle the materials that pile up in daily operations. “You have to look in unexpected places to find resources,” said Lundquist. “Sometimes you have to look at things a little unconventionally.” Lundquist offers these tips to reduce, reuse and recycle. VOCs: Volatile Organic Compounds are found in many products including paint, building materials, automotive products, cleaning agents and glues. Since these items need to be disposed of properly, many companies are using alternative products that do not contain VOCs. Shrink wrap: Companies receive supplies and parts wrapped in shrink wrap. The material holds memory, air and takes up space. MRCI Work Source can help you recycle your shrink wrap. Packing peanuts: These packing peanuts cannot be recycled, but they can be reused and are in high demand by people who sell on eBay. “Recycling is terrific. Reducing waste in the first place is the best,” said Lundquist. For local recycling sources and information, call 304-4440. MV

Jean Lundquist

Lindsay Window & Door hones in on reducing waste By Marie Wood

indsay Window & Door is a green company that manufactures EnergyStar rated windows that conserve energy, last a lifetime and help protect the environment. Environmental stewardship is also reflected in the Lindsay plant and headquarters in North Mankato. For the last 7 years, Lindsay has made an effort to reduce, reuse and recycle so that today 99.9 percent of inbound material is used in a product or recycled. “For every single material that comes into our facility, if it’s not used to make a window, we look at where it can be recycled,” said Geoff Roise, co-owner of Lindsay Window. The company’s current goal is to reduce waste by a third – from three to two yards weekly. “Now people are really looking at it as it’s too expensive to throw things away. That philosophy has grown over the last five years,” said Roise. Here are some tips from Roise on how to do right by the environment. Reusable packaging Roise is working with vendors to use more reusable packaging. One vendor is using plastic crates which are shipped back to the vendor. Other vendors are looking into reusable cardboard. “The real question is how to eliminate using cardboard or reducing the use of cardboard,” said Roise. “It’s becoming a higher priority in the industry.”

Find local suppliers When possible, Lindsay Window uses regional vendors and U.S. made products over products made overseas. This decreases transportation and fuel consumption. “What we’re trying to do is to stimulate the local economy that are close to where we’re replacing windows,” said Roise. “We look for things that are made here and impact the U.S. Economy.” Employee buy-in Employees learn about recycling in orientation and attend monthly meetings that address recycling. Every month Lindsay uses the money it saves by reducing waste and meeting recycling goals to buy the employees lunch. “If you get people bought in to the process, they’ll come up with ideas on their own,” said Roise. Set Goals Set a goal every quarter to identify one thing you can do differently. Focus on one thing, knock it off and then tackle another, said Roise. Join Minnesota Waste Wise Minnesota Waste Wise identified material that could be recycled, as well as recyclers. In one case, experts found a recycler that would pay for materials that Lindsay Window was paying to recycle. MV

MN Valley Business • july 2013 • 23

Arnie and Eileen Wadekamper have operated Arnie’s Sales & Service since the early 1960s.

Arnie’s Sales and Service

Of Snappers and Snowplows and Nectar of the Gods: By Pete Steiner Photos by John Cross

n every season but autumn, the first phone call of the day usually comes around 7:30 in the morning, the last one around ten at night. At 77, Arnie and Eileen Wadekamper are both still putting in 50 hours a week or more. It appears work is good for the soul.

This might be the only Snapper mower dealer anywhere that’s run out of a home garage. But anyone who needs a new Snapper riding mower or a refurbished standard push model can call the same number you could call back in 1961. Well, you do have to add three digits, of course, put a “387” in front of the original “2158.” Gotta accommodate changing times. The Wadekampers signed on with Snapper right

Spotlight

••••

24 • july 2013 • MN Valley Business

from the start. And their garage-sized inventory is a bit deceiving. “We’re a lot bigger than you realize,” says Eileen. They rent warehouse space to store more machines, and at one time, they sold up to 80 Snapper units a year. •••• After working a couple of hourly jobs, Arnie signed on more than five decades ago at Hannaman’s Garage, near the legendary Hilltop Tavern (now Guenther’s). Renting a stall from Jack Hannaman, he began selling and repairing Snapper mowers. But winter was tough on the mower business, so he opened his own gas station, eventually settling in the mid-60’s with a Gulf oil station on Madison Avenue hill where Kober’s nursery is now. The business soon expanded with a new, adjacent showroom that sold snowmobiles, duckboats and travel trailers. In the heavy snow winter of 1965, Arnie had an idea of what to do with three rusty old pickups he had: he and wife Eileen opened one of Mankato’s first commercial snow-plowing businesses. The retail gas business was changing, and by 1976, the Wadekampers were out, making their hilltop home the headquarters of a family business. With the kitchen table doubling as boardroom, they added more plow trucks to deal with the severe winters in the ‘70’s. At their peak, with Eileen fielding service calls from the kitchen, Arnie was running nine trucks. Even today, with just four trucks, plowing is the core of their enterprise.

six snowplowers and shovellers in the winter, while two workers assist with mowing and maintenance in the summer. Most importantly, Eileen’s duties during their 57 years of marriage allowed her to be home while their three children were growing up. •••• If plowing and mowing provide the bread and butter for the family business, it’s maple syruping that supplies the passion. Arnie learned the process from his family as a youngster on the farm near Faribault. In fact, the tradition goes back four generations. When Arnie met Eileen, as she puts it, “I married into it.” That means she gets to wash about 600 Mason jars every year and call eager longtime clients when the syrup is finally ready in the spring. The season can start in February and run well into May. During that time, Arnie and Eileen don’t see a lot of each other. He spends a huge amount of time out at “Arnie’s Syrup Shack,” near a wooded area about two miles east of Mankato. A friend there owns acreage with maple trees, and another acquaintance lets him tap about 200 trees near Lake Jefferson. Arnie makes the syrup “the old-fashioned way.” The sap is hauled to the shack in old ten-gallon milk cans. One ten-gallon can will produce just one quart of syrup. About 400 gallons of sap at a time are poured directly into large pans to be boiled over a wood fire for two days and two nights. Stationed nearby for much of that process, Arnie uses the time to ready more firewood for his three stoves as well as to conduct business via phone. The boiled-down syrup is then run thru filters before it is canned. The mostly snowless winter of 2011-12 was painfully slow for both the plowing business and for maple syruping. With no snow, the frost didn’t come out in time to let the sap run. This year, though, brought a double whammy, as late snows came just as the trees were starting to run. Arnie had to scramble between the syrup shack and keeping his plow trucks running from March through April. Not a lot of time for sleep. The discipline for that probably comes from all the way back when Arnie was a high school state wrestling champ at 133 pounds. Didn’t the Wall Street Journal run an article that advised that the regimen required of wrestlers makes them the best hire of any athlete?

“We’ve tried everything that’s legal!” Arnie Wadekamper

••••

If Arnie Wadekamper had his way, he’d still be cutting and selling firewood by the cord. But last year, he sold off that business. He’s also given up trapping. Eventually in life, you make a few concessions. But one gets the feeling this is the kind of resourceful person who settled the American frontier: “I could always dig enough money out of the woods so we wouldn’t lose the house.” Eileen says that mantra, that the Earth will provide, has been passed down to their children and grandchildren. ••••

As she has for 50 years, Eileen keeps the books, does the marketing, and takes the phone calls. Arnie grins: “I’ve always liked having a LIVE person on the phone!” Eileen: “I think of myself as a salesperson. I really like marketing.” She’s a bit less enthusiastic about the bookkeeping: “Paying social security on the part-timers gets complicated.” Even with their reduced snowplow inventory, they employ

•••• Anyone who runs their own business knows it can get precarious. Arnie recalls one point in the late ‘70’s when

MN Valley Business • july 2013 • 25

Maple syruping is an intensive process with sweet rewards

26 â&#x20AC;˘ july 2013 â&#x20AC;˘ MN Valley Business

About 600 Mason jars are filled with sweet maple syrup every year.

they had to borrow money at 20 percent to keep the business going: “I trusted everybody back then. Some were having tough luck [and couldn’t pay.]” One time he went to collect and ended up taking food from his own freezer to help the struggling family. •••• Elaine says, if syruping paid all the bills, “That’s all he’d do.” Arnie confirms his love of the labor-intensive process: “I can make this product that people enjoy, with my own hands.” The syrup gets darker as the season progresses, and the flavor changes subtly. Arnie gets up from the table and grabs a glass container from the refrigerator. “This is a special ‘fancy’ tapping we did one February.” The color is pale, almost like safflower oil. He pours a tablespoon for the visitor. It is smooth, rich, heavenly sweet, reflecting high sugar content. The Wadekampers always sell out all of their syrup, mostly to friends and friends of friends. With such high demand, Eileen says, “I try to be fair.” Some years that

means two pints, sometimes four, or as in 2012, perhaps none. In a good year, Arnie says he can do 80 gallons. This year he produced 50. At around ten dollars a pint, you do the math. •••• The interviewer makes his way out, past a couple of customers looking at a riding mower, past the bench against the garage wall that holds umpteen old cigar boxes filled with nuts and bolts and washers and sundry other parts the repairman might need. The interviewer smiles, not only at the fact that 90 minutes has flown by, but because he’s also joined the select company that gets to buy a couple pints. His wife will be pleased. MV

MN Valley Business • july 2013 • 27

Connie and Chad Hoffman are the mother-son duo behind Broad Street Brick & Patio, which Connie founded in 1989.

Paving the way

Son joins brick and patio business started by mom By Marie Wood Photos by Pat Christman

28 â&#x20AC;˘ July 2013 â&#x20AC;˘ MN Valley Business

onnie and Chad Hoffman are the mother-son duo behind Broad Street Brick & Patio, the little landscape center that could. Connie founded the business in 1989 to supply pavers and landscaping rock.

need. MVB: What makes up the majority of your business? Chad: Now we do 90 percent or more of installs. That’s the direction we want to focus on. Our main focus is in install.

All In The Family

Today, this Mankato company designs and installs outdoor living spaces, retaining walls, driveways, patios, outdoor fireplaces and water features. They created the duck pond at Sibley Park and assisted in the Veterans Memorial Place and One Bright Star Memorial. Raised on a farm in Wells, Connie has been driving a tractor since the 4th grade. She loves being outside and can drive a skid loader, stick shifts and all the equipment on the lot. Connie also does the bids, landscaping design and bookkeeping. She has attended many seminars on how to install landscape materials. Retail has decreased, but they still provide high-quality supplies for delivery or pick-up. Men are impressed when they ask “Who’s going to load me?” and Connie replies “Uh, me.” Part of the family business since he was a teen, Chad earned a degree in law enforcement from MSU, Mankato, and works part-time as a police officer for Mankato and Lake Crystal. Chad also leads their other businesses: Sign Solutions and a property management company. MVB: Why did you open Broad Street Brick and Patio? Connie: The idea was to do this to pay for Chad’s college. At that time there was nothing else in Mankato that was doing landscape. We started as a retail center and we’ve evolved into the install. Chad: From the beginning, I would help out. When I started driving, I started doing this full-time in the summer. I would do delivery and a little bit of the installs. I helped customers load product into vehicles, shovel rock, that type of thing. MVB: How has your company grown? Connie: When we started, I had a car of no value to the business. Part of the growth was a pick-up. We rented equipment and now we own our equipment. Chad: It was just us two working throughout the summer. Now two work crews are working depending on what we

MVB: How has landscaping changed since 1989? Chad: Back then it was a small 10 by 10 patio and a little rock around the house. We were the first landscaping company in Mankato so we had a niche. Today it’s outdoor fireplaces, kitchens, extravagant backyards, water features, you name it. We still do the 10 by 10 patios too. MVB: What are the latest trends in landscaping today? Connie: We’ve done a number of raised patios and steps. Pillars have become popular as an accent. Fireplaces and seats in walls. Fire pits are something we can do, but there are rules about how far they can be from a house. MVB: What are your roles in the business? Connie: My role is from Day 1, I’ve done it all. I’ve learned to farm out stuff. I do bills and bids. I go out to the customer and look at the backyard and then send a proposal. I meet with people here. Once the bid is given and they accept, I give it to the crew and they install. With retail, if they’re going to do it themselves, I encourage them to bring in pictures so we can see what’s going on. Chad: I do more of the day-to-day operations. We have other businesses too. When needed, I go out and become a landscaper and do work with the guys. Connie: He’s also the counselor and adviser when I have a project that requires assistance. For example, he’s educated me on fences. MVB: What is the biggest reward in your jobs? Chad: Back when I was younger, I did a lot of art. When we go to a house and construct something, we get to do something different every day. That kind of stuff is rewarding. Sometimes I’ll do the drawings for customers or to get building permits. I get to use my old art skills with paper, pencil and ruler. Connie: My biggest reward is helping people, to see an improvement. There are a lot of people who think they can do this, but it’s very labor intensive. Sometimes the do-it-

MN Valley Business • July 2013 • 29

yourselfers will come in for help because the project is taking them all summer. We can do it so fast, a couple days, with a crew. MVB: Connie, what guides you in landscape design? Connie: I like to problem solve. One of my questions to people is how are you going to use this. That will determine your size. My idea is to make it useful, functional. MVB: Connie, what’s it like to work with your son? Connie: It’s nice to be able to work with your son. His brain and my brain work the same way. We have the same thought pattern. We do our own thing. I’m asking for his input. I’m more fortunate than other mothers in that I can work with my son. We do not have too many disagreements ... It’s been a good time. MVB: Chad, what’s it like to work with your mom? Chad: There are always stressors here and there in any business or family relationship. She does a lot behind the

30 • July 2013 • MN Valley Business

scenes that I don’t know or want to do. I appreciate that she does bids most of the time. She knows the customers. I love the creative vision and the hands-on. Connie: When we do the lawn and garden show at the Verizon Wireless Center, the rule is he designs and sets it up and I present myself there all weekend – Friday, Saturday and Sunday. MVB: Since you run several businesses, do your employees work in more than one business? Chad: Our crews do landscape, signs, maintenance, and fixing up properties. Our people that work for us are jacks of all trades. Connie: We don’t want to lose key people in the winter. We want to keep them employed year-round. Chad: Everyone that has worked with us has been a longtime employee. It’s nice to have people that are dedicated and we hope we can take care of them too. MV

keep them healthy and happy. occupational medicine services Mankato Clinic Urgent Care @ Adams Street is your provider of Occupational Medicine Services. Our staff will collaborate with you to help manage risk factors, keep your employees healthy and happy and get them back to work quickly and safely after an injury. No appointment is necessary for most examinations. Just walk in for prompt, professional service. For additional information call 507-385-4075 or visit www.mankatoclinic.com

Urgent Care Hours of Operation: Monday - Friday from 8 a.m. - 8 p.m. Saturday from 8 a.m. - 5 p.m. Sunday 11 a.m. - 5 p.m.

■

Agricultural Outlook

By Kent Thiesse

Understanding the new Farm Bill

fter nearly two years of discussions and debate, a new Farm Bill appears a bit closer to being enacted into law. The U.S. Senate has passed their version of a new Farm Bill in mid-June, and the U.S. House of Representatives is currently working on a new Farm Bill that was passed by the U.S. House Agriculture Committee a couple of months ago. In 2012, the U.S. Senate passed legislation for a new Farm Bill, as did the U.S. House Agriculture Committee; however, the legislation was never brought before the entire U.S. House for consideration. As a result, the previous 2008 Farm Bill, which expired in 2012, was extended for one more year through September 30, 2013. This time around, there appears to be considerable similarities in many of the provisions contained in the new Farm Bill legislation. When most people hear of a “Farm Bill”, they think of the commodity programs and payments that affect crop producers. Some people may be aware that crop insurance and conservation programs are included under the Farm Bill, and some are knowledgeable that food stamps are part of the Farm Bill legislation. However, very few people outside of government officials and policy experts are aware that the Farm Bill also covers funding for rural fire trucks and ambulances, export promotion, international food aid, forestry programs, ag research at land-grant universities, and school lunch programs in public schools. The current proposals for a new Farm Bill being considered in Congress are expected to cost $94$96 billion per year for the next ten years. About 80 percent of the proposed funding for the new Farm Bill will go to the Supplemental Nutrition Assistance Program (SNAP), which includes the food stamp program, the women, infants, and children (WIC) program, and the school lunch program. The needs in the

SNAP program have more than doubled since 2008, due to the economic downturn in the U.S., higher food costs, and an easing in eligibility requirements for food stamps. The new Farm Bill passed by the Senate would cut the spending on SNAP programs by about $400 million per year (0.5 percent), while the House proposal would cut SNAP funding by about $2 billion per year (3.0 percent). About 15 percent of the funding in the new Farm Bill is designated for farm commodity programs and crop insurance programs. Current Farm Bill proposals in the U.S. Senate and U.S. House would eliminate the direct payments that most crop producers have received each year since the late 1990’s, which will save about $5 billion per year in federal spending. The direct payments, as well as the current Average Crop Revenue (ACRE) and permanent disaster (SURE) programs, will be replaced by a new crop risk management program. Farm operators will continue to have payment limits for these payments, and will likely have maximum adjusted gross income (AGI) levels to maintain payment eligibility. The federal crop insurance program will largely remain intact with the new Farm Bill. Many crop producers rely on revenue-protection crop insurance as the primary risk management tool for the large investment that they have in crop production each year. The importance of crop insurance has been quite evident in the past two years, with the severe drought in many parts of the U.S. in 2012, and the late and prevented corn and soybean planting in parts of Southern Minnesota and Iowa in 2013. Crop insurance programs have come under some criticism in recent months, due to the large federal cost for the program and some eligibility requirements. The federal government subsidizes about 62 percent of the annual cost of crop insurance premiums to producers,

32 • July 2013 • MN Valley Business

with the farm operator paying the balance. The government also subsidizes large crop insurance losses, such as with the 2012 drought. Some would like to see the crop insurance subsidy reduced or eliminated. One part of the federal subsidization of crop insurance that is rarely discussed is the fact that in years when the money received on premiums exceeds the insurance indemnity payments in a given crop year, the extra money goes back into the federal treasury. For many Midwestern crop producers, the 2012 drought was the first time that they have received a significant crop insurance payment in decades. Elimination of the federal crop insurance premium subsidy could make crop insurance quite expensive for some producers, which could add considerable financial risk to their farm operations. With approximately 80 percent of proposed Farm Bill funding going to the SNAP programs, and about 15 percent of the funding going to crop insurance and commodity programs, that leaves only about 5 percent of the spending for all the other USDA programs included in the Farm Bill. As can be seen, passage of a new Farm Bill is very complex, with programs ranging from farm commodities, to food and nutrition, to conservation and forestry programs, and many more. Many times finalizing a Farm Bill in Congress can be quite controversial, and not necessarily by political party lines. MV Kent Thiesse is farm management analyst and vice president, MinnStar Bank, Lake Crystal. 507- 381-7960; kent.thiesse@minnstarbank.com

Agriculture/Agribusiness Corn prices — southern Minnesota — 2012 — 2013

(dollars per bushel)

$6.19

$15.25

$13.45

Source: USDA

Iowa-Minnesota hog prices

185 pound carcass, negotiated price, weighted average

— 2012 — 2013

110

$99.81

100

Milk prices

Minimum prices, class 1 milk Dollars per hundredweight

— 2012 — 2013

$19.56

$91.32

70 60

(dollars per bushel)

Soybean prices — southern Minnesota — 2012 — 2013

$7.08

Source: USDA

$17.65 J

Source: USDA. Based on federal milk orders.

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

C. Sankey

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Steve Olson

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Downtown Mankato 507-625-6816 Lake Crystal 507-726-2137

BUSINESS BANKING www.minnstarbank.com Member FDIC

MN Valley Business • July 2013 • 33

Employment/Unemployment Initial unemployment claims

Minnesota initial unemployment claims

Nine-county Mankato region Major April Industry ‘12 ‘13 Construction Manufacturing Retail Services Total*

158 273 46 200 677

Percent change ‘12-’13

226 206 55 194 681

+4.3% -24.5% +19.6% -3% +.6%

Major Industry

April

Construction Manufacturing Retail Services Total*

‘12

‘13

Percent change ‘12-’13

3,313 2,919 1,563 5,572 13,367

3,773 2,982 1,438 5,729 13,922

+13.9% +2.2% -8% +2.8% +4.2%

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

- 2012 - 2013

Nine-county Mankato region

125,921 125,458

30000

(in thousands) 3000

20000

2000

10000

1000

00000

Local number of unemployed

- 2012 - 2013

Nine-county Mankato region 6,631 7,088

0000

Minnesota number of unemployed

- 2012 - 2013

154,766 159,773

200000

8000

150000

6000

100000

4000

50000

2000 0

- 2012 - 2013

2,950.6 2,818.6

Mankato/North Mankato Metropolitan statistical area

Unemployment rate Number of non-farm jobs Number of unemployed

2012

2013

4.4% 55,625 2,533

4.3% 55,888 2,481

Source: Minnesota Department of Employment and Economic Development

34 • July 2013 • MN Valley Business

Unemployment rates Counties, state, nation

(includes all of Blue Earth and Nicollet Counties) April

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

April 2012 4.3% 5.4% 6.2% 6.8% 5.0% 4.4% 4.9% 5.4% 5.8% 5.2% 5.3% 7.7%

April 2013 4.4% 5.7% 6.4% 8.0% 5.2% 4.0% 5.4% 6.2% 6.2% 4.9% 5.4% 7.1% C. Sankey

Construction/Real Estate Residential building permits Mankato

(in thousands)

- 2012 - 2013

$4,672.2 $2,291.8

8000

Residential building permits North Mankato $2,138.1 $1,882.7

3000

6000

- 2012 - 2013 (in thousands)

2000

4000 1000

2000 0

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

- 2012 - 2013 250

Housing starts: Mankato/North Mankato - 2012 - 2013

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

17 15

150

100

50 J

Source: Realtors Association of Southern Minnesota

Source: Cities of Mankato/North Mankato

Commercial building permits Mankato

(in thousands)

- 2012 - 2013

$291.8 $634.5

Commercial building permits North Mankato $0 $1,317.5

2000

- 2012 - 2013 (in thousands)

1500 1000 500 J

Source: City of Mankato

— 2012 — 2013

5.5 5.0 4.5

4.0%

4.0

3.4%

3.5 J

Source: Freddie Mac

Source: City of North Mankato

Interest Rates: 30-year fixed-rate mortgage

3.0

128 149

200

7000 6000 5000 4000 3000 2000 1000 0

Source: City of North Mankato

Existing home sales: Mankato region

Foreclosures: Year End report County

2011

2012

Percent change

Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan

174 67 32 129 43 59 57 50 24

126 37 46 98 42 49 58 57 17

-28% -45% -44% -24% -2% -17% +2% +14% -29%

Source: Minnesota Foreclosure Partners Council C. Sankey

MN Valley Business • July 2013 • 35

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold 1,180 775

1200

Sales tax collections Mankato

- 2012 - 2013

500

1000

$338.8 $315.7

400

800

300

600

200

400

100

200 0

(In thousands)

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

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato

$47,885 $49,563

75000

$31,704 $29,225

40000

Mankato food and beverage tax

- 2012 - 2013 50000

Source: Sales tax figures, City of Mankato

- 2012 - 2013

50000

30000 20000

25000

10000 0

Source: City of Mankato

— 2012 — 2013

4 3

$3.65

2 $3.79

1 0

Gas prices-Minnesota — 2012 — 2013 5 $3.71

4 3

$3.70

2 1 0

Source: City of Mankato

Gas prices-Mankato 5

Stocks of local interest

May 20

June 13

Percent change

Archer Daniels

$34.50

$33.40

-3.2

Ameriprise

$81.67

$82.66

+1.2

Best Buy

$25.68

$27.12

+5.6

Crown Cork & Seal

$44.01

$42.37

-3.7

Fastenal

$51.54

$48.29

-6.3

General Growth

$23.00

$20.84

-9.4

General Mills

$49.14

$49.26

+0.3

HickoryTech

$10.60

$10.40

-1.9

Hutchinson Technology

$5.69

$6.20

+8.8

Itron

$43.45

$42.23

-2.8

Johnson Outdoors

$24.12

$24.77

+2.7

$118.89

$111.28

-6.4

Target

$70.90

$69.15

-2.7

U.S. Bancorp

$35.27

$35.12

-0.4

Wells Financial

$19.80

$19.16

-3.2

Winland

$0.74

$0.78

+5.4

Xcel

$30.12

$29.39

-2.4

Source: GasBuddy.com C. Sankey

36 • July 2013 • MN Valley Business

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MN Valley Business • July 2013 • 37

Advancing Business for a Stronger Community July 2013 MN Valley Business Copy (Page 1)

Considering Cost of Living

Why are wages lower here? Why does cost more? These A number above 100.00 indicates an area’s cost of living is Considering Cost ofgasLiving are the types of questions that come into Greater Mankato above the national average. Lower than 100.00 means the Growth on a regular basis. The answer is: it’s all relative. An community’s cost of living is below the national average. The important weighting factor is Cost of Living. Cost of Living is particularly important, because it Why are wages lower here? Why does gas costComposite more? These are the types of questions that come into Several years ago Greater Mankato Growth joined three takes into consideration a wide variety of factors. So if gas is Greater Mankato Growth onacross a regular basis. answer relative. an important weighti other metropolitan and micropolitans the country in The slightly higheris: thatit’s the all national averageAnd and another factor participating the of ACCRA Cost of Living Index (COLI), like food is significantly below the national average, in terms factor is incost living. produced by the Council for Community and Economic of overall spending power, the consumer still comes out ahead. Several Greater Mankato joined three otherMankato, metropolitan and Cost micropolitans Research. This index is years used by ago the State of Minnesota, U.S. Growth In the case of Mankato-North the Composite Census Bureau, Bureauin of Labor Statistics, CNN Money, of Living is 4.9 points below the national average.by the across the U.S. country participating in the ACCRA Cost of percentage Living Index (COLI), produced and the President’s Council of Economic Advisors. Both employers and employees considering relocating to or Council for Community and Economic Research. This index is used by the State of Minnesota, U.S. The data used in the Cost of Living Index is gathered away from the area have found the Cost of Living tool Census US Bureau of Labor Statistics, CNNinMoney, anda community’s the President's Council of Economi directly fromBureau, the participating communities, which must valuable determining “real wages,” relative adhere to strict data collection standards. Each participating to Cost of Living. For example, a $48,000 job in Madison, WI Advisors. community fills out a lengthy report on a regular basis that is equivalent to a $42,000 job in Mankato-North Mankato. The data in the Living is gathered thewages participating tabulates everything fromused the cost of a Cost loaf of of bread to the Index So, when it comes to directly the questionfrom “why are lower here?” price of a house. This data ismust then compiled the answer may well be “they’re actually higher” – relatively communities, which adhere totodetermine strict data -collection standards. Each participating community fill overall Cost of Living. speaking. out a lengthy report on a regular basis that tabulates everything from the cost of a loaf of bread to the Detailed reports for every participating community in the priceare ofavailable a house. Thisthedata country utilizing Costisofthen Livingcompiled Calculator to determine overall Cost of Living. on the Greater Mankato Growth website at greatermankato. Detailed reports for every participating city in the country are available utilizing the Cost of com/cost-living. Below is a sampling of Metropolitans in the Living Calculator on the Greater five-state region and their relative Cost of Living:Mankato Growth website at greatermankato.com/cost-living.

Composite (100%)

Grocery (13.56%)

Housing (27.02%)

Utilities (10.30%)

Transportation (12.35%)

Health (4.60%)

Miscellaneous (32.17%)

National Average

100.0

Madison, WI

108.8

100.7

111.8

107.5

105.2

122.2

109.5

Minneapolis, MN

108.7

105.3

118.9

100.6

100.5

101.3

108.3

St. Paul, MN

108.0

103.2

116.7

99.2

101.4

102.0

108.8

Rochester, MN

101.1

96.2

114.0

103.1

109.6

101.3

St. Cloud, MN

95.8

107.1

77.1

99.4

96.5

110.3

102.7

Mankato-North Mankato, MN

95.1

102.0

80.0

98.8

103.7

107.6

98.6

Fargo/Morehead, MN/ND

94.4

106.5

84.7

87.5

95.3

104.0

98.0

Sioux Falls, SD

94.0

89.8

87.8

96.9

91.0

98.1

100.6

Waterloo, IA

92.5

93.1

92.2

84.1

96.4

99.7

92.6