MN Valley Business Magazine July 2018 by Free Press Media

The Definitive Business Journal for the Greater Minnesota River Valley

Mark Deichman of Deichman Construction at a home they are building on Madison Lake. Photo by Pat Christman

Construction craze Brisk business in apartments, custom homes

July 2018

Also in this issue • DANNY ROSS OF THE HENDERSON ROADHAUS • RYAN WEMPEN OF KATO MOVING & STORAGE • MARV KOTTKE OF SPRING TOUCH LAWN & PEST CONTROL

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MN Valley Business • JULY 2018 • 1

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F E A T U R E S July 2018 • Volume 10, Issue 10

Apartment, single-family home and commercial development continues to boom in the Mankato area, including a thriving luxury home market.

Danny Ross grew up working in his family’s restaurant and gained more experience in the industry before returning to the area to open Henderson RoadHaus.

St. Peter-based Spring Touch Lawn and Pest Control has seen a growing clientele list and owner Marv Kottke is now starting to franchise the business.

Ryan Wempen is involved in the assisted living industry and is now taking on an additional challenge as the owner of Kato Moving & Storage.

MN Valley Business • JULY 2018 • 3

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JULY 2018 • VOLUME 10, ISSUE 10 PUBLISHER Steve Jameson EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Dean Swanson Amanda Dyslin James Figy Dan Greenwood PHOTOGRAPHERS Pat Christman Jackson Forderer COVER PHOTO Pat Christman PAGE DESIGNER Christina Sankey ADVERTISING Joan Streit Sales Jordan Greer-Friesz Josh Zimmerman Marianne Carlson Theresa Haefner 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 344-6364, or e-mail advertising@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..........24 ■ Retail trends.....................................25 ■ Agriculture Outlook..........................26 ■ Agribusiness trends..........................27 ■ Construction, real estate trends.....28 ■ Gas trends........................................29 ■ Stocks...............................................29 ■ Minnesota Business updates............30 ■ Job trends.........................................30 ■ Schmidt Foundation.........................32 ■ Greater Mankato Growth..................34 ■ Greater Mankato Growth Member Activities ............................36

From the editor

By Joe Spear

Making a new Mankato identity J

uly will mark the first time in and eateries. But traffic jams and 52 years the Mankato area congestion of big urban centers has not hosted a National are nowhere to be found. Football League franchise for a Others are noticing. I ran into a three-week event that drew Twin Cities journalist who used thousands of people from outside to work at The Free Press decades the area. ago and he commented on how What will it mean? Surely, some good Mankato was looking. The of the estimated $5 million in city is getting more and more economic activity will go away, attention. but it may not be as significant as But the big question is still we think. With the Mankato being debated. What will Mankato region being a $1.5 billion retail be known for? Can we forge a new economy, $5 million would seem identity and what kinds of things like small change. will we need to develop to forge The real value of the people that identity? drawn to Mankato for Vikings Some think we should capitalize Training Camp on our history. was more of a While the city’s Could we capitalize on visual effect of distinction for Mankato’s place in history the city looking being the and connect that to our rich alive in the location of the s u m m e r largest mass infrastructure of education without its execution in and higher education 20,000 college the United students. States is one of with a Native American But there’s those events educational museum? been a debate that’s hard to in business and civic circles of make look good in a chamber of just how important the Vikings commerce brochure, it actually were to Mankato in terms of a may be one thing that can be community identity. Some would turned into a positive. argue Mankato was mainly Already, there’s a solid known for home of Vikings reconciliation movement started Training Camp and not much decades ago by Mankato else. I tend to disagree. businessman Bud Lawrence and People connected Vikings Native American leader Amos Training Camp to Mankato, but Owen. A few years ago there was many more associated it with put in place a long overdue Minnesota State University and monument to the 38 Dakota men as a center of higher education. hanged in Mankato at the end of The thousands of alumni from the U.S.-Dakota War. area colleges often reflect fondly Evidence that reconciliation on the bucolic place they went to has worked includes the annual college and are amazed how it Mahkato Wacipi pow wow held has changed into a teeming city each fall in Mankato’s Land of for business and recreation. Memories Park. Native Americans I call it urban light. Mankato from around the country come to has been developing a flashier share their culture. urban feel with public art and There have been talks among glass office towers and historic certain Native American groups buildings and comfortable pubs that Mankato might be a good

4 • JULY 2018 • MN Valley Business

place for a large and substantial Native American history museum that could draw worldwide. The rich history of the area was significant in all U.S. history. Birmingham, Alabama, has done something similar putting the Civil Rights Institute right across the street from the 16th Street Baptist Church, where four young girls were killed in a 1963 bombing orchestrated by members of the Ku Klux Klan The institute has museum-like real artifacts, including a blown up Freedom Riders bus and Klan uniforms. But it also has developed rich educational programs on civil rights around the world. The institute is a real jewel. Some have also suggested the old Post Office building might be the ideal place for a Native American museum. That would put a premier project in a classic historically significant building. The idea could also be expanded to include Native American art, performances and demonstrations of cultural traditions. Could we capitalize on Mankato’s place in history and connect that to our rich infrastructure of education and higher education with a Native American educational museum? Imagine a reconciliation education center as part of the project. The idea has merit. It would capitalize on assets we already have and leverage the growing interest in history and education worldwide. 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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Sadaka joins Landmark

Gretchen Sadaka has joined Century 21 Landmark Realtors in its Mankato office. She has 11 years of experience in the field and most recently worked for True Gretchen Sadaka Real Estate. Sadaka specializes in residential real estate.

managed care company. Prior to Beacon, he served as the chief executive officer for Northeastern Mental Health Center in Aberdeen, South Dakota. ■■■

Three join Pioneer

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Hildebrandt joins ISG

Kevin Hildebrandt, with experience in facility, health/ safety, and planning processes, has joined ISG. The firm said they are enhancing services focused in the education, public works, and government markets. He brings nearly 40 years of experience, most recently as the 20-year director of buildings and grounds for Faribault Public Schools. ■■■

Sioux Trails names director

Joe Manuel has been named the executive director at Sioux Trails Mental Health Center. He replaces Catherine Job who is relocating to the southeastern U.S. Manuel previously worked with Beacon Health Options, a national behavioral health

FUNDING TRACKER Nancy Thorkelson, Mankato Funding Work Group Leader

Nancy loves the opportunity to work with a variety of communities to identify funding options to create and enhance sustainable and healthy places to live, work, and play.

We treat each client as if their community is our own. Many times it is.

Jeff Barrett

Tim Nuebauer

Pioneer Bank has added Jeff Barrett, Lance Jeppson and Tim Neubauer in their Mankato and St. James locations. Barrett is originally from Lance Jeppson St. James and is a graduate of St. Thomas University. He has seven years of experience as a banker and serves as assistant vice president and ag/business banker in St. James. Jeppson is originally from St. James and is a graduate of Winona State University. He has 15 years of experience as a banker and serves as vice president and business banker in Mankato. Neubauer is originally from Humboldt, Iowa, and is a graduate of Iowa State University. He has seven years of experience as a banker and ser ves as vice president and ag/business banker in Mankato. ■■■

Primrose names director

Primrose Retirement Community of Mankato has hired Lori Pietsch to be their new Bolton-Menk.com Executive Director. MN Valley Business • JULY 2018 • 5

Pietsch is a graduate of Mankato State University and holds a degree in business education. She was formerly the sales director at Primrose of Mankato and brings 25 years of experience in the insurance and financial services industry. Primrose, 1360 Adams Street, consists of 34 independent living apartments and 23 assisted-living apartments. ■■■

Vetter names Kaus COO

Vetter Stone Company promoted Ben Kaus to chief operating officer of Vetter and subsidiar y Alabama Stone Company. Kaus had been vice president of Vetter. Kaus joined Vetter Stone Company in 2014 as operations manager. He is a 2006 graduate of Minnesota State University. ■■■

Browender joins True

Zoe Browender has joined True Real Estate as an agent at their Mankato location. Browender was born and raised in Mankato and graduated from Mankato West High School and attended Minnesota State University. ■■■

MinnStar promotes Monson

Mark Monson has been promoted to CEO/president at MinnStar Bank. He joined the bank in 2010 as the primary commercial lender. This year he transitioned into the role president of MinnStar Bank and upon the retirement of outgoing CEO/President Steve Olson he became CEO. His office is in the Mankato location, 201 Poplar Street, and continue to perform his commercial lending duties along with the CEO responsibilities. He was also elected to the MinnStar Bank Board of Directors. He started in banking in 1991 as a teller at the First State Bank of Emmons. BUSINESS BANKING

6 • JULY 2018 • MN Valley Business

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McGowan honored

Mike McGowan, vice president of McGowan Water Conditioning in Mankato, received the “Regents Award” from the national Water Quality Association. He has been a longtime board member of the Minnesota Water Quality Association. The Regents award is given to those who have shown significant involvement at the state level on matters of concern to the water treatment industry. He is the third generation involved in the business. He holds WQA’s Master Water Specialist title. ■■■

Pioneer makes promotions

Pioneer Bank has promoted seven employees at their Mankato, North Mankato, St. James and Madelia locations. Nathan Newhouse has been named president and will continue in his role as a business banker at the Mankato location. Alissa Brekke has been named president and will continue in her

role as a business banker at the North Mankato location. David Beck has been named assistant vice president and will continue his role specializing in business and agribusiness banking at the Madelia location. Heather Eischen has been named assistant vice president and will continue her role specializing in residential mortgage lending at the St. James office. David Gullixson has been named assistant vice president and will continue his role specializing in business banking at the North Mankato location. In addition, Assistant Vice President, Jennifer Mathistad, has been promoted to teller supervisor and Laura Roloff has been promoted as a personal banker at the St. James location. ■■■

ISG honored

recently recognized as one of the country’s leading design firms by the Engineering News-Record magazine’s annual industr y rankings. The firm was ranked 324 in terms of revenue, up from 349 in 2017 and jumping 125 spots from its position in 2016. ■■■

Dammer joins CTS

Computer Technology Solutions has hired Kyle Dammer as project manager/vCIO. Dammer has spent the last 23 years in different areas of IT including government, education and manufacturing. For the past 13 years he was the IT director for corporations that had multiple locations nationally. As vCIO, he looks at processes and how a business can use technology to make their company more efficient.

ISG, an architecture, engineering, environmental, and planning firm that celebrated its 45th anniversary this spring, was

MN Valley Business • JULY 2018 • 7

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Business Commentary

By Dean Swanson

Getting products ready for e-commerce sale

es, an e-commerce website can be a viable strategy for growing your small business sales. However, setting up and managing an e-commerce website to sell your company’s products involves a lot of work and knowledge of what might boost or bust your bottom line. In my last few columns I have focused on ideas for setting up the site. But, one topic that needs to be mentioned is what you need to do to get your products ready for selling through e-commerce. I learned some important steps to do this preparation from Michelle Covey, vice president, retail apparel and general merchandise at GS1 U.S. With more than 20 years of experience working with retail supply chains, she is responsible for helping companies achieve source to store supply chain visibility — ensuring that the right product is in the right place at the right time for today’s consumer. Michelle suggests the following steps:

product’s visibility in consumer search results. Online marketplaces like Amazon and eBay recognize that these numbers benefit both their buyers and sellers so they have outlined specific preferences for using UPCs in product listings, and some online retailers will even hide listings that do not contain these product identifiers. To address these specifications, you should ensure that the identification numbers assigned to your products are authentic and include a GS1 Company Prefix, which will provide proof that your brand is linked with your product. Licensing a Company Prefix from the not-for-profit standards organization, GS1 US, allows you to create product identification numbers (UPCs/GTINs) and barcodes (for scanning in-store) for each of your products. If your company has product variations, such as various flavors or colors, you will need to have separate identification numbers (and barcodes) for each item.

Make your product searchable

Help consumers “picture” it

A Universal Product Code (UPC), also called a Global Trade Item Number (GTIN), is used by major retailers and small businesses alike to identify and track product inventories. This unique string of numbers is visible within the barcodes of products we buy and consume every day at retail stores. Many small business owners don’t know that the identification number encoded in a barcode has online relevance too. They not only help you streamline operations by connecting the digital listing with the physical product, they increase a

Every seller hopes to avoid negative reviews or product returns. Think about your own experiences as a shopper—you will likely scroll past a product listed with only one dark image and gravitate toward the one with numerous photos at different angles highlighting the product’s key features. Clear imagery is a necessity in today’s competitive online marketplace and more pictures can lead to higher sales conversions. In fact, a recent Nielsen study found that the majority of mobile shoppers (62 percent) rated the ability to see product pictures as

8 • JULY 2018 • MN Valley Business

the most important factor in their shopping decisions. Professional photos of your product taken at different angles are critical to confirm that your product meets your target audience’s expectations.

Present all relevant data for consumers

You might only get one chance to connect with a consumer — help them find your product and make a purchase by compiling and sharing all relevant details. Packing your listing with helpful and complete information about the product’s unique characteristics (for example, highlighting that a sweater is hypoallergenic and machine washable) can be a great point of differentiation and help sell your product versus the competition. Not sure how you can accomplish this on a tight budget? There are helpful content providers who are skilled in the art of managing product content and creating accompanying imagery for small businesses without breaking the bank. Ultimately, retail has evolved in exciting ways to benefit smaller startups with great products just looking for the right audience to break through. While the process of launching products can seem complex at first, applying these best practices can help propel your company forward for future growth and success.

Dean L. Swanson is a volunteer Certified SCORE Mentor and former Regional Vice President for the North West Region www. seminnesota.score.org

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Deichaman Construction workers put finishing touches on the exterior of a home on Madison Lake.

Under construction Builders struggle to keep up with demand

By Tim Krohn | Photos by Pat Christman

oaring lumber prices, rising interest rates and a lack of skilled workers are a triple threat that is hammering the home-building sector in many parts of the country. But in the Mankato area those pressures seem to be having little or no effect on the pace of construction as the region continues to grow. “It’s been awfully busy. The phone keeps ringing,”

said Scott Umhoefer, president of R.W. Carlstrom Co., which does commercial projects. Mike Drummer, of Drummer Construction, said they have trouble keeping up with home and apartment demand. “We have so many people looking for houses right now that we have more work than we can handle. We build a lot of spec homes, and as soon as they’re on the market,

Cover Story

10 • JULY 2018 • MN Valley Business

Deichman Construction workers put in footings for a sports center that will be built under the garage of a new home in Lake Crystal.

City Manager Pat Hetges they’re selling,” he said. Mark Deichman, who builds high-end custom homes, said that sector is also booming. “The demand is as high as I’ve ever seen it both in construction and remodeling. I’ve been doing this 26 years.”

Commercial strong

Umhoefer said Carlstrom Co. has long done a lot of work – both new construction and interior renovations – for the medical industry.

“We do a lot of work for the Mayo system in Mankato and New Prague and Fairmont. Everything in the medical area is big,” he said, noting that Mayo, Mankato Clinic, River’s Edge Hospital in St. Peter and others have been expanding. The company is working on the addition to the Johnson Outdoors building in the Eastwood Industrial Park. The warehouse is being added onto, and the Johnson employees who’ve long been housed in offices on Madison Avenue will move into the new space. Carlstrom is also soon starting on a big project for Blue Star Energy in North Mankato’s industrial park. Blue Star is relocating from a smaller facility near Lake Crystal and is building a 105,000-square-foot facility in Northport. Umhoefer said area developers are starting to feel the pinch of the worker shortage. “We’ve been lucky. We have a good crew and we’ve been able to keep busy and keep people busy. We’ll be stretched a little later this summer, but I think we’ll be fine.”

While lumber, steel and aluminum prices have jumped, he said he hasn’t seen any problems with shortages of any materials. He said it’s been nice to see the steady growth and new construction locally. “In 2009 and ’10, things were awful. But since then, it’s just been growing every year and I hope it stays that way.” Other commercial construction, including new restaurants and office buildings are also going strong. A new office tower is slated to begin construction soon at the corner of Main and Seconds streets downtown, with Eide Bailly to be the major tenant. Just across the intersection, next to the library, a new office building is also going up to house a counseling center. Concern has surfaced about a glut of big retail buildings sitting empty after the closing of Sears, Gander Mountain, Gordman’s and the soon-to-close Herberger’s. City Manager Pat Hentges said that while some are raising alarms about the prospects of filling all those vacant spaces, he’s not concerned. He said that put in

MN Valley Business • JULY 2018 • 11

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perspective the commercial/ retail vacancy rates now are relatively small. “You only need to look back as recently as ’96. Then the old Kmart building was empty; now it’s Rooms & Rest. Madison East mall was nearly empty. The downtown Mankato Place mall was empty.” Now Madison East is filled with mostly medical-related offices and Mankato Place is thriving with government of fices, entertainment and other tenants. “Now we’re seeing Gander Mountain and River Hills Mall with some large spaces. But in proportion to what existed in 1996, it’s way better now than at that time,” Hentges said.

Housing demand

A lot of local house and apartment construction this year is focused on the east side of Mankato, particularly around the new Prairie Winds School. Drummer platted 11 singlefamily lots last year in one area of Prairie Winds. “We sold four already and we didn’t even have any roads in yet.” He’s starting another 41-lot subdivision with work beginning recently to put in roads. Another subdivision, on vacant land south of the Wickersham

12 • JULY 2018 • MN Valley Business

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R.W. Carlstrom Co. is building the addition to the Johnson Outdoors building in the Eastwood Industrial Park on the east side of Mankato. campus and north of Augusta Drive, is beginning this summer. Circle Seven Inc. plans a 28-acre development with the initial phase involving the extension of Premier Drive to the north and construction of 34 twin homes occupying 11.5 acres just to the west of the extended street. Another 24 units are planned for the second stage. There’s also apartment or twinhome developments starting near the WOW Zone, along Sibley Parkway downtown, near Benson Park in upper North Mankato and in College Town near Rosa Parks School, among others. Deichman said the only down side to this year’s construction season has been the very late start as developers had to wait for frost to come out of the ground and fight heavy rains. “We had all these contracts and we’re waiting to start, and then when the weather breaks, everyone wants it done now. “It’s a very busy year. Every year gets a little better.” Deichman’s crew designs each house from scratch. “We design if for a specific lot so it’s designed to fit that lot the best.” He said the tight existing home market is helping builders.

“Probably half the homes we’re building are from clients who didn’t really want to build a home. They wanted to buy an existing home but couldn’t find one.” He said one of the trends he’s seen recently in home construction is in the interior woodwork. “Painted millwork and kitchens is still a big trend. I can’t remember the last one’s we’ve done that were stained.” He said high-end homes also often include a swimming pool. “A few years ago there were only a handful. Now every other house has a pool in it.” Deichman said they’re also building a lot of sports courts in new homes. “We just finished one with a fullsize gymnasium. A lot of them are like a half-court basketball court. Kids plays all kinds of sports in them in the winter,” he said. “We never used to see any of those, but now half of everything we build has some kind of sport court in them.” He said the sports courts are often off the back of the house, but he’s building one in Lake Crystal now where the sport court is going to be under the garage. He said that while the homes

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A new office tower is to begin going up on the corner of Main and Second streets in downtown Mankato with Eide Bailly as its primary tenant. are expensive, they’re usually not as big as they used to be. “We have a big emphasis on efficient use of space. There were a lot of 8,000- to 10,000-squarefoot homes pre-recession. Now they’re usually 5,000 to 6,000 square feet. That’s still a big space, but we’re not wasting a lot of space with high ceilings and other things.”

Deichman said he also pays a lot of attention to energy efficiency. They rate all homes for a Home Energy Rating System, or HERS, score. The HERS rating is done by independent companies that measure a variety of things in a home and give it a score. The better the score, the cheaper it is to heat and cool. “People are really looking for

that. And it helps them when they sell it, too,” he said. “When you’re talking green, there are several things, like locally sourced material, recycled things, etc. But people care most about efficiency – that helps their pocketbooks and helps them resell it.” MV

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Danny Ross has owned the RoadHaus Eatery, Bar and Event Center in Henderson for the past seven years. The restaurant, bar and event center are all connected businesses in the downtown.

A place to gather Henderson RoadHaus draws locals, tourists By Amanda Dyslin Photos by Jackson Forderer

lichés should be avoided, especially by standing Arlington Haus and the Henderson writers. It’s just plain lazy. RoadHaus, grew up in restaurant kitchens. But once in a while, a person comes He still looks the part. But there’s a lot about along who so embodies a him that would surprise particular colloquialism most people. that an exception must be Most notably? Ross was made … and when it a ballroom dance comes to Danny Ross, you instructor for 14 years. HENDERSON can’t judge a book by its “I am big into music, ROADHAUS cover. and it was the late ’90s Covered in tattoos, with the swing craze of 514 Main St., Henderson unkempt jet black hair that time period,” he said. 507-248-3691 stuffed under a ball cap, “And (I went to see) the Facebook: Ross seems to fit the bar jazz bands and rockabilly Henderson Roadhaus and restaurant culture to bands at the time, and I perfection. Anyone who’s just started dancing.” worked in a restaurant understands there’s a While dancing at a Ritz-Carlton one night, distinct culture among line cooks that a guy asked Ross where he taught dance involves rough language and a subversive lessons. (He, of course, did not.) And that nature. compliment led him to pursue dance and Ross, 42, whose family owns the longlearn ballroom styles – the Argentine tango

Cover Spotlight

16 • JULY 2018 • MN Valley Business

Damion Taylor cooks a hamburger in the kitchen at the Henderson RoadHaus Eatery. being his favorite. “I still teach a little bit here in our event center,” Ross said of the RoadHaus. During the last seven years or so, Ross has dedicated his time to managing and transforming the RoadHaus, whose roots can be traced back 32 years to another business his mother, Denise Swenson, owns. During Ross’ formative years, he spent a great deal of time working at the Arlington Haus, a popular pub and eatery that opened in 1986. “I lived there from 10 years old to 15,” Ross said. He cleaned, did dishes and started learning basic food prep at 10 years old. Later he worked as a line cook. At age 16, Ross took a job as a food runner for the buffet the first year Mystic Lake Casino Hotel opened under that moniker. He worked as a cook elsewhere during high school before moving to Florida to work at an Italian family restaurant as a prep cook, eventually moving up to executive chef at a young age. “At that point, I was 20. Everybody was older than I was. It was a high-volume establishment. A salaried position,” Ross said. “My only day off was Monday because the restaurant was closed that day.” Years later, following the ballroom era – and after Ross was married to his wife, Amy Ross, and they had their first child – they were living in Minneapolis and looking for other opportunities. He was thinking about going to work with his mom at the Arlington Haus when the opportunity arose for the family to buy the Henderson RoadHaus space. The daughter of the family who held the note to the place had worked for Swenson, and they thought

perhaps she might want to open a second location in the historic 1914 Main Street building. “We came and looked at it and fell in love,” Ross said.

Diverse clientele

Ross had 100 percent reign over the restaurant’s look and menu choices, which includes mostly American fare. The cube-shaped cheese curds are especially popular. First-time customer Cindy Caughey said the flavor reminded her a bit of a grilled cheese sandwich. On a warm afternoon, Caughey and her friend, Marie Enberg, who are in their 20s, were sitting in the bar area. A couple on the restaurant side – who Ross greeted by name – were in their 80s. Ross said that diverse clientele is typical and exactly what he was hoping to achieve when they opened. “Our inspiration was just filling a niche in the community and to be a hub for families to get together and for neighbors to get together,” he said. Ross was also quick to capitalize on Henderson’s tourism. The river valley attracts a lot of visitors, so an attached event space is marketed for music, open mics, meetings and special events like weddings. The bar and restaurant also does a lot of programming like car roll-ins and art classes. A newer addition to the restaurant is a newly constructed store nook at the storefront window called Archaica Curiosities & Obscurities with handmade wares from “archaic to the apocalyptic.” There are skulls, bath bombs, gothic mirrors, paintings and “all things interesting.”

MN Valley Business • JULY 2018 • 17

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18 • JULY 2018 • MN Valley Business

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Another recent addition to the RoadHaus will be especially popular with tourists, Ross surmises. Henderson attracts a lot of Prince fans because a dirt road east of town and a spot on the banks of the Minnesota River were filming locations in 1984’s “Purple Rain” movie. Ross added a marble bench, mural, street signs and landscaping outside, an idea spearheaded by Joel King, a retired Hollywood cinematographer who lives in Henderson. As for the food, Ross has added St. Paul style hand-tossed pizzas to the menu, which honors his grandfather who owned a pizzeria in St. Paul. “It will channel memories of my grandfather,” he said. Ross is excited about the future of the RoadHaus and his plans to keep bettering the place. There’s work to be done on the event center to update it and add French doors leading out to an outdoor courtyard, for example. But he’s also happy with how far the place has come, including everything from paint to windows to removing carpeting from the walls. Community volunteers have even been part of the renovation work. “I can’t say enough great things about the people here,” he said. “It’s hard to put it into words.”

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Join the Family! Mankato | Vernon Center | Amboy www.cbfg.net MN Valley Business • JULY 2018 • 19

From left, Nathan Newlands (son-inlaw), Marv Kottke, and son Brian.

Going national Spring Touch begins franchising By Dan Greenwood Photos by Pat Christman

usiness has been good for St. Peter procedures, writing the franchise based Spring Touch Lawn and Pest disclosure document, and then operations Control. In fact, manuals, training it’s been so good that manuals; it’s a process.” the company is breaking Kottke got his start in ground this year on the business as a franchising at the 10-year-old mowing national level. President neighbors’ lawns in the SPRING TOUCH and owner Marv Kottke 1970s. LAWN & PEST says franchising has “My dad provided me CONTROL been on his radar for a a John Deere tractor and 430 West Ritt St., St. Peter long time. With the help I had my little wagon 507-388-9100 of his daughter Jennifer behind it with my push springtouchlawn.com and Vice President and mower and I went from son-in-law Nathan yard to yard,” Kottke Newlands, the company said. “Then in high was finally given the green light to launch school I got my applicators license, which the new expansion. meant I could now fertilize and spray “It was a dream of mine,” Kottke said. lawns.” “The last five years, the three of us have Kottke always wanted to be his own boss been working hard on franchising the and he had higher ambitions for his business, putting in the systems company. He took business core classes at

20 • JULY 2018 • MN Valley Business

Feature

Minnesota State University. After that, he went to horticulture school at the University of Minnesota. Now the company’s workforce swells to 60 employees during the peak season and ser vices 10,000 customers throughout south-central Minnesota. “Basically we see ourselves as urban farmers, instead of a crop of soybeans it’s grass,” Kottke said. “You need the right environment for that turf to grow. You need good soil, sunlight and rain. Those are the three key ingredients.” Kottke and his team help ensure that happens with the help of his science and a horticulture background. Ninety five percent of their customers are residential, but they also treat the sprawling lawns of St. Olaf and Gustavus College, a relationship that has spanned 25 years. They offer a variety of services ranging from pest and fungus control to maintaining sprinkler systems. When they moved to their present location from North Mankato, the team became temporar y construction workers to remodel the building. Now they even have a call center to expedite customer support.

A win-win

Kottke says the choice to franchise stems from a policy of creating a win-win scenario for both franchiser and franchisee. A lot of companies grow and open branches in other cities and towns, creating a top-down approach. Franchising is different from the corporate model in that the franchisee is an owner. “The franchise model is a bunch of mom and pop organizations working under one large brand one umbrella. So it isn’t corporate America. What you’re doing is helping them grow their business and giving them the benefits of the national brand. So you join forces. You all have a vested interest in it. We don’t collect royalties unless they produce.” Newlands, an Australia native who joined the family business when he moved to Minnesota, says franchisees also benefit from purchasing power. “If you were to go to Menards

Brian Kottke makes an application to a lawn. Spring touch does a variety of lawn care including fertilizing and pest control. and say ‘I’ve got a little lawn care company - I need to buy this fertilizer,’ you’d be paying whatever price. At our size for every area, we get a reduced discount which then we can pass on to the franchisees at a national level. They are saving a lot of money on product that we can help them with that would normally cost a lot more.” Kottke and Newlands say their ultimate goal is to eventually have several hundred franchises across the nation. But they’re planning to take it slow. They spent most of last year travelling the country visiting different franchises and

learning from them. What they’ve learned is that the best way to succeed is to start regionally and slowly expand out with a ripple effect, taking their time to develop relationships with new franchisees. “We don’t need to sell franchises to keep the lights on,” Newlands said. “We are a successful business, we want to use that to help others. We are more after the right people. If it’s not a right fit we’ll part ways. It’s about awarding them, not selling the franchise.” MV

MN Valley Business • JULY 2018 • 21

Ryan Wempen purchased Kato Moving & Storage last year and and has been immersing himself in the business as he continues to handle other business interests.

Smooth moves

Kato Moving and Storage takes the stress out of relocation By James Figy | Photos by Pat Christman

yan Wempen is constantly moving. Over the late 1980s, Mayflower bought Deike and merged into past few years, he has become increasingly this location,” he said. busier as president of the Birchwood Cottages Wempen is finished branching out into new assisted living facilities and industries, for now, but he does manager of Owatonna Self Storage plan to grow in the two he’s and Mankato Mini Storage. But his invested in: assisted living and newest role is president of Kato moving and storage. His newest Moving & Storage, a member of the Birchwood Cottages complex is KATO MOVING Mayflower moving network. scheduled to open in North Since purchasing the business in Mankato in June. & STORAGE 2017, he has moved into an office on What makes owning multiple 417 Poplar St., Mankato the second floor of Kato Moving & companies feasible, he said, is 507-388-9329 Storage that looks out over Poplar putting the right people in katomoving.com St. Constructed in 1881, the leadership and backing them up. structure was built for a moving “I try to hire the best people to company. Although the property do the jobs and let them run with has changed hands a few times, Wempen said he is what they need to do. I support the people and their the fifth owner of a moving company in that location. decisions,” he said. “I personally do the books for all “This was the Deike Moving Company. Back in the of the companies that I own. I know my numbers well.

Profile

22 • JULY 2018 • MN Valley Business

Storage lockers are stacked in the Kato Moving & Storage warehouse in Mankato. I pay the bills, and I write the checks. That’s the piece I hold onto in all of the businesses.” Wempen also turns to employees for advice when needed, such as when he took over Kato Moving & Storage. He had worked with the previous owner for a few months before officially taking ownership of the company last year, but the staff members continue to provide great assistance and insight. “Luckily, we kept a lot of experience when I bought the business. Linda (Olson) has been here 41 years, and knows the business inside and out. And Kerry (Sorensen), our dispatcher, has been here eight years,” he said. It’s important for a moving company to have quality employees, especially in the summer, which is always a tough time in the industry. More than 40 percent of all moves take place during June, July and August, according to a report from consumer website My Moving Reviews. The report, which analyzes more than 142,000 moving requests and 26,000 reviews submitted through the website, states the two busiest moving days of every year are July 31 and August 1. Beyond the fact that so many people are rushing to move during the warmer months, moving is often stressful for many reasons. “Normally it’s coupled with other stressful things, such as job changes, divorces or downsizing. It’s always seemingly a stressful situation,” Wempen said. “...Our goal is to take the stressful piece of the move out of the way for the customer. That’s why we have to be flexible and change and adapt to what the customer needs. Whether it’s timing changes or sending an extra guy or two to help them finish boxing, we’re going to take care of whatever needs to happen.”

The best way to avoid problems is through thorough planning, Wempen said. This is why the company tries to send an estimator to check out every move beforehand. Sometimes it isn’t an option, but Wempen works to make every move go as smoothly as possible. Kato Moving & Storage often helps with moving single, sometimes large items, packing up people’s U-Haul rentals and even carrying items to the curb for Spring Cleanup days in North Mankato. However, the fleet of three semis and six box trucks can also relocate customers around the globe. The company has moved folks to Sweden, the United Kingdom and other international destinations this year. Every week, they help families and businesses move across town and across the country. “We focus on the moves that are under 500 miles with our guys and our trucks,” he said. “But the Mayflower system has 200 movers across the country. We all work together.” Wempen, a St. Peter native and 1990 Minnesota State University graduate, enjoys giving back to the community, so the company assists with Scouting for Food and transporting new artwork for the CityArt Walking Sculpture Tour from South Dakota each year. “We try to be very active in the community,” he said. “We volunteer a lot of truck time.” MV

MN Valley Business • JULY 2018 • 23

■

Business and Industry Trends

Energy Jet fuel exports up

The United States exported 186,000 barrels per day of jet fuel in 2017, the eleventh consecutive year of increasing gross jet fuel exports. Almost twothirds of exports went to countries in Latin America and the Caribbean, especially Mexico. Relatively high domestic production and a growing international aviation industry have established the United States as a net exporter of jet fuel for the seventh straight year.

The United States exported jet fuel to 54 destinations in 2017, with 22 percent of these exports going to Mexico. U.S. exports of jet fuel to Mexico increased from 4,000 b/d in 2010 to 40,000 b/d in 2017.

Distilled fuel top export

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24 • JULY 2018 • MN Valley Business

Distillate fuel continued to be the most exported U.S. petroleum product in 2017, averaging 1.4 million barrels per day of gross exports. Distillate exports went to 79 dif ferent destinations, particularly to markets in Central America, South America, and Europe. The proximity of U.S. Gulf Coast refineries to Mexico and to Central and South America combined with high demand in these regions led to higher U.S. distillate exports to these locations. In 2017, the United States exported 27 percent of total domestic distillate production, continuing years of increasing exports and relatively flat U.S. consumption growth. Because domestic distillate demand is highest in the winter months, U.S. distillate exports tend to be highest in the summer months. In February 2017, however, warmerthan-normal U.S. temperatures coupled with colder-than-normal European temperatures led to above average winter exports of distillate, especially to markets in Europe. Unlike motor gasoline, which is used almost exclusively for transportation, distillate fuel has a variety of uses, including as a heating fuel in homes and businesses, as a fuel for certain industrial processes, and as a transportation fuel for both lightand heavy-duty vehicles.

Crude up $5

Retail/Consumer Spending

Brent crude oil spot prices averaged $77 per barrel in May, an increase of $5 from the April level and the highest monthly average price since November 2014. Brent spot prices are estimated to average $71/b in 2018 and $68/b in 2019.

Summer gas costs up

For the 2018 April–September summer driving season, the U.S. regular gasoline retail prices should average $2.87/gallon, up from an average of $2.41 last summer. The higher forecast gasoline prices are primarily the result of higher forecast crude oil prices. Monthly average gasoline prices are expected to reach a summer peak in June of $2.92 and are forecast to decline gradually afterwards to $2.84 in September.

Crude production up

U.S. crude oil production averaged 10.7 million barrels per day in May, up 80,000 barrels a day from the April level. U.S. crude oil production should average 10.8 million b/d in 2018, up from 9.4 million b/d in 2017, and will average 11.8 million b/d in 2019.

Renewables up

Vehicle Sales Mankato — Number of vehicles sold - 2017 - 2018 1500 1200 900 600 300 0

(In thousands)

600

Natural gas record

52500

Coal production is forecast to decline by 2 percent to 756 million short tons in 2018. The production decrease is largely attributable to a forecast decline of 5 percent in domestic coal consumption in 2018, with most of the decline is expected to be in the electric power sector. A forecast decline of 4 percent in coal exports also contributes to lower expected coal production in 2018. Coal production is expected to decline by 2 percent in 2019.

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

Sales tax collections Mankato

70000

Coal production down

Source: Sales tax figures, City of Mankato

Electricity generation from natural gas-fired power plants should rise from 32 percent in 2017 to 34 percent in 2018 and 2019. Electricity generation from coal averages 28 percent in 2018 and 2019, down from 30 percent in 2017. The nuclear share of generation was 20 percent in 2017 and is forecast to be 20 percent in 2018 and 19 percent in 2019. Nonhydropower renewables provided slightly less than 10 percent of electricity generation in 2017 and are expected to provide more than 10 percent in 2018 and nearly 11 percent in 2019. The generation share of hydropower was 7 percent in 2017 and is forecast to be about the same in 2018 and 2019. U.S. dry natural gas production averaged 73.6 billion cubic feet per day in 2017. Forecast dry natural gas production will average 81.2 Bcf/d in 2018, establishing a new record. It is expected natural gas production will rise again in 2019 to 83.8 Bcf/d.

1,011 852

- 2017 - 2018 $444

$410

500 400 300 200 100 0

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato

- 2017 - 2018

$43,360 $43,944

35000 17500 0

Source: City of Mankato

Mankato food and beverage tax - 2017 - 2018 175000 140000

$65,600 $66,400

105000 70000 35000 0

Source: City of Mankato

C. Sankey

MN Valley Business • JULY 2018 • 25

■

Agricultural Outlook

By Kent Thiesse

Minnesota’s dair y industr y has changed dramatically

ost people outside of agriculture think of dairy farming in Minnesota as being a stable industry that is mainly comprised of smaller dairy farms being operated by hardworking farm families. This perception of the State’s dairy industr y has been gradually evolving and changing over the last several decades. While dairy farms in Minnesota are still owned and operated by family farmers, the farms have become much larger, more mechanized, and far fewer than a few decades ago. According to statistics from the U.S. Census of Agriculture, there were over 24,000 dairy farms in Minnesota in 1982. By 1997 that number had declined to approximately 9,600 dairy farms, and by 2012 to 4,700. The total number of milk cows in the State was nearly 840,000 in 1982, dropping to over 541,000 in 1997, and declining to just over 463,000 by 2012. So, during the 30-year period, the number of dairy farms in Minnesota declined by 80 percent, while the number of milk cows only declined by about 45 percent, as a result of the increasing size of the remaining dairy farms. This evolution to fewer and larger dairy farms will likely be accentuated even more when the next U.S. Census of Agriculture data is released later this year. Over the past few decades, Minnesota’s overall ranking for the number of milk cows and total milk production among other States has also dropped. Rapid development of very large dairy operations in some western states have allowed some of those states to surpass Minnesota in both Dairy cow numbers and milk production.

Based on the May1 USDA Milk Production Report, Minnesota had 454,000 dairy cows in April, 2018, and produced 813 million pounds of milk for the month. California led the nation with 1.7 million dairy cows and total production of over 3.45 billion pounds of milk. Wisconsin was second with nearly 1.28 million cows and a total milk production of more than 2.5 billion pounds in April. Other States that exceeded Minnesota in both dairy cow numbers and milk production in April were New York, Idaho, Pennsylvania, and Texas. Michigan also exceeded Minnesota in milk production in April. California’s dairy cow numbers have been relatively stable in the past decade at about 1.7 to 1.8 million cows, after rapid increases in dairy cow numbers during the 1990’s and early 2000’s. By comparison, Wisconsin’s dairy cow numbers were over 1.8 million in 1980, but declined to 1.26 million by 2010, which is close to the current dairy cow numbers. On the other hand, Idaho grew from 148,000 dairy cows in 1980 to 600,000 cows at

the beginning of 2018. Similarly, New Mexico has grown from only 39,000 dairy cows in 1980 to over 330,000 cows in 2018. This compares to Minnesota’s more significant decline in dairy cow numbers in recent decades. Dairy cow numbers have also changed dramatically in all counties in southcentral Minnesota (refer to the adjoining Table). All counties had declines in dairy cow numbers from 1980 to 2000, ranging from a 64 percent decline in Watonwan County and a 56 percent decline in both Blue Earth and Martin Counties, to declines of 34 and 36 percent respectively in Nicollet and Brown Counties. From 2000 to 2018, eight of the nine counties in South Central Minnesota continued to drop in dairy cow numbers, with Blue Ear th, Mar tin, and Watonwan Counties all showing declines of 60 to 70 percent. Other counties in the region had more moderate declines in dairy cow numbers from 2000 to 2018, ranging from 7.5 percent in Sibley County to over 20 percent in other counties. Nicollet County, which now ranks ninth in the State in dairy

CHANGES IN DAIRY COW NUMBERS (1980 to 2018) COUNTY 1980 2000 2018 % CHANGE % CHANGE (Cows) (Cows) (Cows) (1980 to 2000) (2000 to 2018) Blue Earth 4,100 1,800 700 -56% -61% Brown 12,300 7,800 4,800 -36% -38% Faribault 4,200 2,200 1,600 -47% -27% Le Sueur 8,800 4,500 3,600 -49% -20% Martin 3,400 1,500 500 -56% -67% Nicollet 8,700 5,700 11,100 -34% +94% Sibley 16,000 9,100 8,400 -43% -7.5% Waseca 7,000 3,600 2,400 -48% -33% Watonwan 2,800 1,000 300 -64% -70%

26 • JULY 2018 • MN Valley Business

cow numbers, bucked the trend of declining dairy cow numbers. Nicollet County had an increase of 94 percent in cow numbers from 2000 to 2018, increasing from 5,700 to 11,100 cows. This was primarily due to the addition of some larger dairy operations during that time period. Interestingly, Nicollet County had 27 percent more dairy cows in 2018 than the 8,700 cows in the county in 1980. Stearns County has the highest number of dairy cows in Minnesota in 2018 with nearly 70,000 cows, with a decline of just under six percent in cow numbers since 1980. Stearns County far surpasses Winona and Morrison counties, which currently rank second and third in dairy cow numbers, with 29,000 and 28,000 cows respectively. Stevens County, located in the prairie of West Central Minnesota, is surprisingly the fourth ranked county in dairy cow numbers with nearly 22,000 cows in 2018. Stevens County had only 2,300 cows in 2000, but several very large dairy operations have located in the county in the past two decades. Minnesota’s dair y industr y remains a ver y important segment of the agriculture industry, and is still very important to the State’s economy, especially 8 in Greater Minnesota. The dairy industry accounts for approximately 12 percent of Minnesota’s total 6 agricultural receipts, trailing only the State’s hog industry for cash receipts from livestock production. 4 It is estimated that Minnesota’s dairy industry (not including dairy processing) accounts for $3.8 billion in economic impact annually, and is responsible for 2 9,437 jobs in the State. Minnesota is the home of several 0 dairy processing plants for fluid milk, cheese, J other F M dairy A products, M J J which A Sadds O further N D butter, and economic value and employment from the State’s dairy industry. Profitability has been one of the biggest challenges for dairy 8 producers in the past few years. Milk prices at the farm level were near $20 per hundredweight most100 of 6 the time from 2011 to early 2015, peaking at over 85 $26 per hundredweight in the fall of 2014. Following several fairly profitable years from 2011 to 4 2014,70milk prices had declined to below $18 per hundredweight by the end of 2015. The milk prices at 552 the farm-level have stayed in the $16 to $18 per hundredweight for much of the time during 2016, 400 2017, and J early F 2018, M A which M Jis below J A the S breakeven O N D level 25 for many dairy producers. The continued low J inF dairy M Afarming M J hasJ resulted A S inO a large N D profitability number of small to medium sized dairy farms exiting the business in the past couple of years. A new challenge to the Minnesota dairy industry is the ongoing trade disputes that the United States has 100 with Canada, Mexico, China, and other countries. 85 Minnesota ranked eighth in the U.S. in 2017 in the export70of dairy products, with a total export value of approximately $190 million. China, Mexico and Canada 55 accounted for 53 percent of Minnesota’s dairy exports in 2017. The ongoing North American Free Trade40Agreement (NAFTA) negotiations, as well as potential China tariffs on U.S. agricultural products, 25 A Mon the J Jfuture A on S the O dairy N D could haveJ a Fbig Mimpact production and processing industries in Minnesota. Minnesota will continue to have a strong and vibrant dairy industry in the future; however, that

Agriculture/ Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2017 — 2018

$3.26

2 0

$3.40

Source: USDA

Soybean prices — southern Minnesota

(dollars per bushel)

— 2017 — 2018 8 20 100 16 6 85 $9.40 12 470 8 255 $9.29 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

— 2017 — 2018

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

$86.85

22 19 16

$72.24 A M J A M J A M J

M M M

Milk prices

J J J

A S O N D A S O N D A S O N D

Minimum prices, class 1 milk Dollars per hundredweight

— 2017 — 2018 25 22

$16.70

19 16 13 10

$14.47 J

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 • JULY 2018 • 27

Construction/Real Estate Residential building permits Mankato

Commercial building permits Mankato

- 2016 - 2017 (in thousands)

$996 $1,109

18000

12000 10000

13500

$2,227

6000

9000

4000

4500

2000

Source: City of Mankato

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

Existing home sales: Mankato region - 2016 - 2017 (in thousands)

Median home sale price: Mankato region - 2016 - 2017 (in thousands)

250

300

132 143

240

$163,500

200

$143,000

150

180

100

120

60 0

$3,992

8000

0 J

Source: Realtors Association of Southern Minnesota Source: Realtor Y Association of Southern Minnesota Thank ou f Auto Repair an Thank Y o

Includes single family 7 yea Auto Rep Housing starts: Mankato/North Mankato homes attached and

Interest Rates: 30-year fixed-rate mortgage — 2016 — 2017

- 2017 - 2018

5.5

5.0

4.5

4.1%

4.0

3.5 3.0

detached, and town homes and condos

4.1% J

Source: Freddie Mac

10 D

Source: Cities of Mankato/North Mankato

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Gas Prices

Gas prices-Mankato

— 2017 — 2018

54 43 $2.70

32 21 10 0

$2.18

Gas prices-Minnesota

— 2017 — 2018

industry will likely have fewer and larger dairy farms. Those farms will likely be more technologically advanced, more mechanized, and will likely produce milk for more specialized processing plants. However, milk prices at the farm level in Minnesota will need to improve soon to slow the rapid exit of small to medium sized family farms from the dairy business.

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

5 54 $2.79

43 32

$2.25

21 10

C. Sankey

Source: GasBuddy.com

Stocks of local interest

May 11

June 11

Percent change

Archer Daniels

$43.98

$45.62

+3.7%

Ameriprise

$137.07

$147.61

+7.7%

Best Buy

$77.78

$74.04

-4.8%

Crown Cork & Seal

$44.68

$45.24

+1.3%

Consolidated Comm.

$11.68

$12.16

+4.1%

Fastenal

$51.78

$52.96

+2.3%

General Growth

$20.64

$20.78

+0.7%

General Mills

$42.66

$44.26

+3.8%

Itron

$66.25

$58.62

-11.5%

Johnson Outdoors

$73.08

$79.66

-9.0%

$205.66

$205.44

-0.1%

Target

$70.25

$79.12

+12.6%

U.S. Bancorp

$51.50

$51.64

+0.3%

Winland

$1.50

$1.30

-13.0%

Xcel

$45.26

$42.07

-7.0%

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C. Sankey

MN Valley Business • JULY 2018 • 29

Minnesota Business Updates

■

bring more renewable energy onto the system. Xcel customers could pay almost double the standard rate during peak hours, from 3 p.m. to 8 p.m., while from midnight to 6 a.m. the rate would be about half the norm. The pilot, initially open to 10,000 customers, will launch in 2020. TOU rates are widely recognized as a way to help utilities reduce peak load and expensive electricity deliveries. While regulators and power companies have moved cautiously to embrace new rate structures, California utilities will fully embrace them next year when TOU rates become the default for all customers.

■ Best Buy’s new logo Best Buy is tapping its own 100,000 blueshirted employees as the stars of its new marketing campaign, a rebranding effort designed to highlight the retailer’s personalized customer service. The Minneapolis-based electronics chain rolled out a new website and logo, and is airing new TV spots. “It’s really about building more aggressively toward serving customers and helping change lives with technology,” Whit Alexander, who was promoted to chief marketing officer last year, told AdAge. “We needed a way to tell the story a little differently through how we interact with customers.” Alexander says the new work, which has a “rallying cry” of “Let’s talk about what’s possible,” positions Best Buy as an inspiring friend that can help consumers achieve their goals. Work on the campaign started roughly a year ago. The “big thrust” of the new work was done internally.

■ Sears shuttering stores Sears will close three stores in Minnesota, including one Kmart, as part of a larger shrinking of the once robust retailer known for its Craftsman tools and mailorder catalog. The retailer will shutter its Shingle Creek Crossing store in Brooklyn Center and its Miller Hill Mall location in Duluth, as well as a Kmart store at 215 N. Central Ave. in Duluth in September, according to a list posted on its website. Sears previously closed its Mankato store. The beleaguered retailer, which operates Kmart and Sears stores, announced Thursday it was closing 72 stores across the nation, but then amended that number

■ Xcel to test rate tool The Minnesota Public Utilities Commission has approved a residential time-of-use pilot rate for Xcel Energy, a tool the utility hopes will help it engage customers, use price signals to shift energy usage and

Employment/Unemployment Initial unemployment claims Nine-county Mankato region Major April Industry 2017 2018 Construction Manufacturing Retail Services Total*

88 119 44 103 354

Local non-farm jobs Percent change ‘17-’18

207 135 28 143 513

126000

2100 1400

113000

700 100000

Minnesota initial unemployment claims

Minnesota Local non-farm jobs

Major Industry 139000 139000

2017

2018

Percent change ‘17-’18

Construction 126000 126000 Manufacturing Retail 113000 Services 113000 Total*

2,739 1,473 952 3,202 8,366

4,038 1,491 886 3,609 10,024

+47.4% -1.2% -6.9% +12.7% -19.8%

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

3500

135,953

2800

+135.7% +13.4% +36.4% +38.8% +45.0%

30 • JULY 2018 • MN Valley Business

127,956

139000

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.

April

- 2017 - 2018

Nine-county Mankato region

(in thousands)

8000 3500 3500 6000 2800 2800 4000 2100 2100

- 2017 - 2018

2,925 3,005

2000 1400 1400

700

700 0 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 J F M A M J J A S O N D

200000 150000 100000 50000 0

to 63. “A small group of stores was pulled from the closing list of 72 stores on May 31 as they are being evaluated further,’’ a notation on the company’s site said, adding the list would be updated. It did not say what stores are under evaluation.

especially with its national account customers. Fastenal reported sales of $431.4 million, up 12.5 percent over a year earlier, with daily sales up by that same amount. That follows April sales of $409.4 million and daily sales growth of 13.4 percent. May was Fastenal’s 12th straight month of double-digit daily sales growth — with growth of at least 12 percent in each month. For perspective, Fastenal didn’t have 12.0 percent growth in any month between February 2015 and May 2017 during the industrial economy downturn.

■ CHS sells headquarters

CHS Inc. has sold its headquarters building and 24-acre campus in Inver Grove Heights for $55 million, but also signed a 20-year lease to remain at the location. 139000 3500 ■ Medtronic lays our plans The company’s 1,000 workers at corporate headquarters will remain there, CHS spokeswoman Medical device maker Medtronic PLC told investors 2800 Rebecca Lentz told the Star Tribune. that the company plans to grow its $30 billion in 126000 2100 “We are committed to the communities in which we revenue by about 4 percent per year organically, while live and work,” she said in an e-mail. “Similar to many earnings per share will grow at twice that rate in 1400 other companies, we decided to sell the building and coming 113000 years, according to the Star Tribune. lease the space back long-term as part of our overall Speaking at the company’s investor day in New York 700 capital and financial planning.” City, executives from Minnesota-run Medtronic said the 100000 global manufacturer will hit revenue and 0 The building and land are located near the interchange diverse J F M A M J J A S O N D J of Interstate 494 and Hwy. 52 at 5500 Cenex Drive. earnings targets by investing in high-growth niches like CHS is the nation’s largest farmer-owned cooperative leadless pacemakers and diabetes devices, while and Minnesota’s second-largest privately held company, controlling costs by reducing manufacturing sites, with $31.9 billion in annual sales in fiscal 2017. centralizing back office functions, and other moves. CHS 139000 was formed from the merger of Cenex and “We 3500 are spending more than $2 billion a year on R&D 139000 States Cooperatives. 3500 to 8000 Harvest invest in growth platforms that will sustain our 200000 2800 for the future,” CEO Omar Ishrak said. “But as growth 2800 126000 we6000 do this, it is not just our ability to execute our pipeline 150000 2100 ■ Fastenal streak continues 126000 2100 successfully. It is also about allocating our investments Fastenal reported its May 2018 sales results, showing 4000 to 1400 move our center of gravity to higher-growth end 100000 that the113000 Winona-based distributor’s considerable year- 1400 markets.” 113000 700 over-year growth continued across the board — 50000 2000 700

100000 100000 J F

J M

Employment/Unemployment

F M A A M J

M J

J A

J S

Local number of unemployed

4000 2100 1400 2000

S N

O D

8000 6000

4,918 4,577

4000

0 F F

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

J A A

J S S

A S O N O N D O N D

100000 50000 J

M MJ

J JA

J JS

A AO

S N S

O D O

N N

D D

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

April

100000

0 F

J M

F M A A M J

M J

J A

2017

2018

2.9% 58,660 1,722

2.4% 61,085 1,528

J S

A O

S N

O D

Unemployment rates Counties, state, nation County/area

- 2017 - 2018

102,046 96,021

150000

F M A M AJ FA M

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

100000

200000

0 0 J F JM

Mankato/North Mankato Metropolitan statistical area

150000

2000

700 0 J 0 J

D 0

200000

Minnesota number of unemployed

- 2017 - 2018

Nine-county Mankato region 8000 3500 6000 2800

A O

Blue Earth Brown Faribault Le Sueur 2018 Martin 2017 Nicollet Sibley Waseca Watonwan Minneapolis/St. Paul Minnesota U.S.

April 2017

April 2018

3.0% 4.2% 4.7% 5.5% 3.6% 2.5% 3.9% 4.2% 4.8% 3.3% 3.4% 4.1%

2.5% 3.9% 4.0% 5.4% 3.2% 2.3% 3.5% 4.5% 3.8% 2.7% 3.1% 3.7%

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

Minnesota unemployment MN Valley initial Business • JULY 2018 claims • 31

Sponsored by the Carl & Verna Schmidt Foundation

Fund investing has never been cheaper

By Associated Press

eing cheap pays off when it comes to fund investing, and more investors are heeding the call. Investing is full of uncertainties, as the gyrations of the past few months attest, and keeping costs low is one of the few things that investors have within their control. Plus, having low fees is a pretty good predictor of a fund’s future success, researchers say. That’s why it’s encouraging that a pair of recent reports show that investors paid less in expenses last year across their stock, bond and other types of funds. Funds don’t send a bill outlining their managers’ salaries and other expenses. Instead, they carve their fees out of money already invested in the fund. Last year, the average stock mutual fund kept $59 of every $10,000 invested, down from $63 the year before, according to the Investment Company Institute, an industry trade group. The figure has been dropping steadily for decades: In 1996, it was more than $100 of every $10,000 invested. “Fees continue to come down, yet again,” said Sean Collins, chief economist at the Investment Company Institute. “Across the board, you’re seeing reductions. There’s a lot of competition.” Fees are dropping for mutual funds and exchangetraded funds that track indexes, which are already famous for being low-cost investments. But they’re also falling for actively managed funds, where teams of managers and analysts try to pick which stocks and bonds will do better than the rest of the market. Costs are dropping for both stock and bond funds, as well as for the target-date retirement funds that have become

32 • JULY 2018 • MN Valley Business

the default for many 401(k) plans. A big factor is how discriminate investors have become in choosing funds based on their fees. Consider actively managed U.S. stock funds, which generally have higher expenses because they employ teams of managers poring through cash-flow statements in hopes of finding winners. Investors yanked more than $270 billion out of these types of funds last year, continuing a yearslong trend. Investors have been turned off not only by their higher fees By Stan Choe but also by the fact that most have failed to keep up with index funds over the long term. But one small subset of them was able to attract new dollars: the cheapest ones. The actively managed U.S. stock funds that ranked among the cheapest 5 percent for fees drew $3 billion, according to the Investment Company Institute. With dollars concentrating in just the lowestcost funds, overall expenses paid are dropping. “We always hear actively managed funds are bleeding cash, they can’t compete with index funds,” said Shelly Antoniewicz, senior director of industry and financial analysis at the Investment Company Institute. “But it’s fiercely competitive.” Even index funds, which already have low fees because they simply track the S& P 500 and other indexes, have seen their expenses drop. Here, as with actively managed funds, investors are very aware of costs. Of all the dollars that went into U.S. stock index funds last year, roughly half of the total went into those that rank in the cheapest 5 percent. So, be proud of being thrifty. MV

Sponsored by the Carl & Verna Schmidt Foundation

Quenching a thirst? Investing in water-related funds By Alex Veiga | Associated Press As natural resources go, oil tends to get more attention from investors than clean drinking water, even against the backdrop of headline-grabbing shortages in Flint, Michigan, South Africa and elsewhere. But a few funds are showing that investing in utilities and water infrastructure and technology companies can pay off, especially for long-term investors looking to diversify their portfolio. Several exchange-traded funds invest in waterrelated stocks, including PowerShares Water Resources ETF (PHO), First Trust ISE Water Index Fund (FIW) and Tortoise Water Fund (TBLU). Each holds shares in U.S. water utilities, such as American Water Works, infrastructure companies like Aegion Corp. and technology companies like Xylem, a supplier of energy-saving pumps and controls for hot water systems. The three ETFs are all up around 15 percent over the past 12 months. By comparison, the S& P 500 is up about 13 percent in the same period. Their investment rationale centers on the growth in the need to update the infrastructure used to treat and transport clean water. The idea being that as demand for water grows along with the population, so will the need for new infrastructure and upkeep on water systems. “What we try to do is focus on essential assets, and from our standpoint there’s really not a much more essential asset than water,” said Matt Weglarz, portfolio manager at Tortoise Index Solutions. “And people are really starting to realize we have a global water problem on our hands.” Weglarz notes that global water demand is expected to grow by more

than 50 percent over the next 30 years. The need for access to clean water has grabbed international headlines this year after a severe drought hit Cape Town and other parts of South Africa, prompting leaders there to warn that the city of 4 million would have to close most water taps sometime this year. The so-called “Day Zero” when the taps are supposed to be shut off was supposed to happen last month. It has since been put off thanks partly to residents consuming water at restricted levels. Closer to home, in Flint, Michigan, thousands of home water lines are still being replaced following revelations in 2015 that the city’s water system was contaminated with lead due to a lack of treatment. A 2015 assessment by the Environmental Protection Agency estimated that $472.6 billion was needed to upgrade the nation’s public water infrastructure system. That includes the cost to fix or upgrade thousands of miles of pipe, thousands of treatment plants and other key components of the nation’s water system. “It’s been well laid out to us that whether it’s through news about water scarcity or news about the demand for water or need around improving our water infrastructure, those are all reasons that you would want to be in a clean water portfolio of companies that are addressing any one of those areas,” said Dave Fanger, CEO of Swell Investing, which operates a managed portfolio of water-focused companies. Weglarz sees opportunity for investors to capitalize on clean water infrastructure and technology spending for years to come because of the need to upgrade and maintain water systems across the U.S. MV

MN Valley Business • JULY 2018 • 33

If you are reading

this

it’s likely you are...

reenSeam utilizes agriculture to build on the region’s extensive agribusiness assets to develop the ag economy. If you live and/or work in southern Minnesota or northern Iowa, you are part of the seam...the GreenSeam. Numerous partners, supporters and Greater Mankato Growth successfully launched the GreenSeam inititiave in June 2016. Here are just a few of the ways GreenSeam has helped make a big impact and bring awareness about agribusiness to this region: • The Visit Mankato celebration of harvest event launched last year - Gather in the GreenSeam brought in more than 9,000 visitors to The Children’s Museum of Southern Minnesota in October • The 35th Annual Rural Legsilative Forum was held in January with outstanding attendance, raising awareness about key issues facing the rural economy and discussing potential solutions.

34 • JULY 2018 • MN Valley Business

•

Farmamerica and Junior Achievement have expanded their partnership with GreenSeam. Four school districts sent a group of 7th and 8th grade students to Farmamerica to learn about ag careers. Ag Biz in the Modern Economy at Minnesota State University, Mankato kicked off the first class in January - with a full roster. To learn more visit: greenseam.org or contact us at 507.385.6640 or email info@greenseam.org

1 8 6 8

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celebration of Greater Mankato Growth, Inc. and the success of the entire business community. We invite you to continue that celebration with us at our sesquicentennial event where we will commemorate Takin’ Care of Business for 150 years in Greater Mankato!

GREATER MANKATO GROWTH? NETWORKING TW WORKING ORKING

Tuesday, October 2 4 – 8 pm Mankato BEBrewery IN

It’s not just st WHO WHO you ou know, it’s who knows k YOU. Networking IS Powerful.

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Greater Mankato Growth would like to thank this year’s entertainment, all attendees, the business vendors and the 2018 sponsors for making the 15th Annual Songs on the Lawn another success! Special thanks to: City of Mankato, Children’s Museum of Southern Minnesota and the Mankato Family YMCA

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RIBBON CUTTING

Franklin Rogers Park 601 Reed Street, Mankato

Sleep Number 1861 Adams Street, Suite 100, Mankato

NEW LOCATION

GROWTH

Blinds & More 100 Warren Street, Mankato

in Greater Mankato

NEW BUSINESS

RIBBON CUTTING

Your Couch Counseling, LLC 100 Warren Street, Suite 329, Mankato

Farrell’s eXtreme Bodyshaping Mankato 1170 South Riverfront Drive, Mankato

The Benefits Umbrella 100 Warren Street, Suite 303, Mankato

Tech Brothers 219 Maxfield Street, Mankato

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Arnold’s of Mankato 1715 Howard Drive, Mankato

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36 • JULY 2018 • MN Valley Business

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Kato Family Chiropractic 800 South Front Street, Mankato

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Presidio Maschka, Riedy, Ries & Frentz Law Firm Stifel Sesquicentennial Event in collaboration with the Mankato Brewery and Radio Mankato at the brewery (4 - 8 pm) Children’s Museum of Southern Minnesota J. Longs for Men EXPOSURE

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MN SENIOR GAMES: Return of the sports By Katie Adelman, Marketing and Communications Coordinator

“Replacing the economic impact void left by Vikings Training Camp while growing the Minnesota Senior Games by creating continuity in host sites is a win-win,” said Anna Thill, President of Visit Mankato. The 2018 Minnesota Senior Games is anticipated to bring an estimated economic impact of $276,000 and is expected to have a positive impact on hotels, restaurants and retail establishments.

eaturing more than 20 sports and bringing approximately 650 athletes, the Minnesota Senior Games is back in Greater Mankato for four days of competition August 16-19. “Mankato is expected to see an influx of athletes this year because it’s a national qualifier for the 2019 National Senior Games,” said Joelle Baumann, Visit Mankato’s Special Events Manager. “We’re excited to showcase the community and its outstanding recreational amenities and facilities to a national audience.” Mankato was the host of last year’s Minnesota Senior Games. In the past, various communities including Owatonna and Alexandria have hosted. After this year, the event will start its two-year rotation in Saint Cloud. Mankato’s next two-year host site will be in 2021. The recurring event agreement came following the 2017 announcement that the long-standing Minnesota Vikings Training Camp in Mankato would move to the Vikings’ new facility in Eagan.

Competitors must be 50 years of age or better in the year the competition is held to be eligible and can compete in a variety of events including archery, cycling, disc golf, pickleball, swimming, track & field and more. A complete list of sports and registration details can be found at MNSeniorGames.com. To make sure the sports run smoothly, the Mankato Sports Commission is seeking volunteers to assist at various locations throughout the community. While it varies by sport, typical volunteer duties may include, but are not limited to, assisting with athlete check-in, providing direction on the courses, assisting event coordinators, awarding medals and ensuring that competitions continue in a timely manner. To volunteer, visit: mktosports.com/senior-volunteer. A new feature Visit Mankato is implementing for the 2018 Minnesota Senior Games is Meetingmax, a simple yet powerful reservation software to manage event and tournament hotel room bookings. Meetingmax is used to track and report key accommodations data, provide a value-added service and create a new revenue stream. The Mankato Sports Commission and Visit Mankato are looking forward to hosting the Minnesota Senior Games in 2018 and in the years to come! For more information about the Minnesota Senior Games August 16-19, visit: MNSeniorGames.com.

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» C OME JU DGE

for Yourself.

GOLFERS FROM AROUND THE WORLD COME TO CHALLENGE THE JUDGE and the two other golf courses in Prattville at RTJ Capitol Hill. Bring your clubs and come take on Judge hole number 1, voted the favorite hole on the Trail. Complete your day in luxury at the Marriott and enjoy dining, firepits and guest rooms overlooking the Senator golf course. With the Marriott’s 20,000 square feet of meeting space, 96 guest rooms and luxurious Presidential Cottage combined with three world-class golf courses, business and pleasure can definitely interact in Prattville.

THE ROBERT TRENT JONES GOLF TRAIL AT CAPITOL HILL offers three magnificent 18-hole championship golf courses. The Marriott Prattville is part of the Resort Collection on Alabama’s Robert Trent Jones Golf Trail. Visit www.rtjgolf.com or call 800.949.4444 to learn more.

Ag Business Careers Abundant During the past 9 months, the College of Business at Minnesota State University, Mankato took steps to highlight and promote to students the numerous career opportunities related to agriculture in our region. The course, Ag in the Modern Economy, developed and taught by management assistant professor Dr. Shane Bowyer focused on agriculture careers. It filled immediately with over 40 students. Dr. Bowyer also successfully wrote a Minnesota Agriculture Education Leadership Council (MAELC) grant to add additional programming to promote agriculture careers. A “Careers in Ag” workshop was designed to educate high school teachers about agriculture careers, so they could then return to their classrooms and promote this diverse and vibrant industry to their students. “The Careers in Ag event was incredibly helpful for educators to see how classroom curriculum content can connect to a variety of careers in Agriculture, Food, and Natural Resources,” said Kim Mueller of Mankato Area Public schools. “The conversations and tour allowed participants to network, make curricular connections and build awareness that can be brought back to the individual classrooms.” The teachers had discussions with representatives from Aker, Arnolds Implement, Christensen Farms, CLA, Compeer, Hubbard Feeds, RCEF, State Bank, U of M Extension, and the USDA. There were many careers discussed but most were focused on business-related jobs such as accounting, management, technology and sales. The Southern Minnesota Center of Agriculture and GreenSeam assisted in providing information and insight into the careers in the region. Davis Dairies hosted the afternoon workshop showing teacher technologies central to their business and operations.

For more information or to get involved with this new program, contact Dr. Bowyer at shane.bowyer@mnsu.edu.

Teachers and ag professionals discuss the industry at the Careers in Ag workshop.

College of Business students explaining the careers in aquaponics to high school students MN Valley Business • JULY 2018 • 41

Minnesota State University, Mankato College of Business

“GreenSeam has an abundance of career opportunities for just about every skill set a person may have,” Director Sam Ziegler said. “The challenge is connecting people to the exciting careers and preparing young minds for future careers.

SURGICAL EXPERTISE IN MANKATO.

From colon cancer to hernias to gallbladder dysfunction, our team will provide exactly the care you need, from diagnosis through rehabilitation, right here in Mankato.

Call 507-594-4700 to schedule an appointment. mayoclinichealthsystem.org MN Valley Business • JULY 2018 • 42