Mnvalley jan18 by Free Press Media

The Definitive Business Journal for the Greater Minnesota River Valley Januar y 2018

Mankato City Manager Pat Hentges. Photo by Pat Christman

Growth spurt Mankato’s east side expanding Also in this issue • HOLTMEIER CONSTRUCTION • DESIGN & WINE • ANDERS BJORLING PHOTOGRAPHY

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REALITY CHECK: WhyMilenialsNeed an Estate Plan

ccording to a recent study conducted by Princeton Survey Research Associates International, 78% of Millennials (ages 18-36) do not have an estate plan. One of the major reasons cited by Millennials for not taking the time to create even a basic Will is that they do not have any significant assets worth protecting. However, there are many reasons to engage in estate planning besides wealth preservation, such as directing assets to intended beneficiaries, designating a guardian for your children, and providing direction for your medical care during times of incapacity.

Millennials Have Assets

No matter what stage of life you are at, you have an estate and can benefit from basic estate planning. For younger clients, assets usually include a vehicle, jewelry, electronics, and home furnishings. In addition, most of us Millennials have started saving for retirement either

personally or through employersponsored programs. And depending on your goals and personal situation, you may have already purchased a home or plan on doing so in the near future. Unfortunately, it is equally likely that you have accumulated a significant amount of student loan debt. Indeed, ever-rising tuition and the poor job market following the recession have created a situation where your debts may exceed your assets. Nevertheless, federal student loans are generally discharged on the death of a borrower, so you may still be able to pass a large portion of your estate to family and friends. So you’re convinced that you have assets worth transferring. How do you make sure those assets get to the right people? If you don’t have an estate plan, your assets will be automatically distributed according to the default rules under Minnesota’s intestate laws. For example, the property of a person

who dies without a spouse or children surviving passes directly to their parents. For Millennials who are living with a significant other, but have yet to get married, the harsh reality is that your partner could be left with nothing if you don’t have a plan in place. As a result, every Millennial should consider having a basic Will drawn up. Such a document will help ensure that unmarried partners and other important people are treated fairly upon your passing.

Conclusion

Estate planning is not just for high net-worth individuals, the elderly, or people with children. Whether you are looking to transfer assets to specific relatives or simply make sure the right person is making decisions for you if you’re incapacitated, an estate plan can help ensure your wishes are respected and carried out. After all, the only guarantees in life are death and taxes.

MN Valley Business • JANUARY 2018 • 1

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F E A T U R E S Januar y 2018 • Volume 10, Issue 4

It was another busy year for development, including multi-family and single family housing, in Mankato and North Mankato. Next spring will see a new burst of growth.

Laura Doyen began taking her easels and art supplies to home parties and turned it into a storefront business with her Design & Wine shop on Belgrade Avenue in North Mankato.

When Joe and Bethany Holtmeier started Holtmeier Construction they were the only employees. Today they have 80 employees and do a variety of construction work.

Anders Bjorling, owner of Swedish Kontour Imports, began experimenting with photography as a child, but it was only in retirement that he got to fully pursue his passion.

MN Valley Business • JANAURY 2018 • 3

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JANUARY 2018 • VOLUME 10, ISSUE 4 PUBLISHER Steve Jameson EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Dean Swanson Amanda Dyslin Dan Greenwood James Figy PHOTOGRAPHERS Pat Christman Jackson Forderer COVER PHOTO Pat Christman PAGE DESIGNER Christina Sankey ADVERTISING Phil Seibel MANAGER ADVERTISING Jordan Greer-Friesz Sales 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..........20 ■ Retail trends.....................................21 ■ Agriculture Outlook..........................22 ■ Agribusiness trends..........................23 ■ Construction, real estate trends.....24 ■ Gas trends........................................25 ■ Stocks...............................................25 ■ Minnesota Business updates............26 ■ Job trends.........................................26 ■ Schmidt Foundation.........................28 ■ Greater Mankato Growth..................30 ■ Greater Mankato Growth Member Activities ............................32

From the editor

By Joe Spear

Growth stunning, but clouds loom

eading this month’s cover stor y that provides an overview of Mankato and North Mankato development and an outlook for 2018, one cannot help but be optimistic. There’s an incredible amount of single family and multi-family home building going on and more likely on the way. Mankato has been adding 100 single-family townhomes or houses each year. Mankato City Manager Pat Hentges suggests that number may grow with the opening of vast tracts of development land on the east side of the city. And while North Mankato has fallen short of its goal of 30 new single family homes per year, it too has approved housing subdivisions with smaller lots that appear to be enticing housing developers as well. Saying commercial development is solid would be a bit of an understatement Developers Tony Frentz and Rob Else have announced they will break ground this spring on a new $19 million, seven-story glass office tower at the corner of Main and South Second Street that will include a lower level restaurant and a rooftop event center. It will be the new home of Mankato’s Eide Bailly offices. The developers estimate some 175 workers will occupy the building in the heart of downtown. A new 199-space parking ramp will accommodate the growing City Center as an event location. Developer Mike Brennan also appears to be very close to securing a large tenant that would launch his Bridge Plaza building, another glass-office tower set for the old Embers property next to the Veterans Memorial Bridge. The city of Mankato has been busy laying infrastructure for the east side developments and

4 • JANUARY 2018 • MN Valley Business

Hentges says that is being driven by the demand for private development. Sewer, water and road development will reach $7 million in the expansion of the east side areas. The development projects exist in a market that has signs of remarkable growth. Population has been rising about 2.5 percent per year, far beyond earlier expectations. Mankato regional consumers appear to be buying big ticket items. Auto sales through the first 10 months of 2017 are up 8 percent in Mankato compared to last year. During the same time period, existing home sales were up 3 percent, but inventories are tight. But there are risks to this rosy picture this year and beyond. The Federal Reserve’s decision to raise interest rates again has developers and bankers worried in Mankato. There was talk that one low-cost apartment complex may be thwarted if interest rates go up. Some affordable housing projects in Minnesota were soon to be nixed, according to another expert we spoke to. Interest rates have been so low for so long, an increase would likely make housing investors skittish if not fearful. The Fed announced Dec. 13 that it was raising the benchmark interest rate a quarter of a percent again and planned to raise it three times in 2018. Notably, the Minneapolis Federal Reser ve Bank President Neel Kashkaari and the Chicago Federal Reserve Bank President Charles L. Evans voted against the rate hike. They argued the Fed should wait until there is more evidence of inflation and the need to raise interest rates. Fed Chairman Janet Yellen said the rate hike was necessary because the economic

growth was picking up and the tax cuts soon to be passed by Congress would provide a further boost. Uncertainty, and especially uncertainty about the cost of borrowed money, creates fear in markets. The recent interest rate hikes and plans for three more create more uncertainty. Hopefully, cities installing infrastructure by miles at a time will remember the lessons of the 1980s and 1990s where spikes in interest rates killed housing and development at a time when cities had already gone “whole hog” into investing in infrastructure. Empty lots went into foreclosure saddling cities with unexpected debt burdens. The cost of housing is also growing and an interest rate hike may exacerbate the problem. Housing developers say Mankato has a bottleneck of sorts. People are not able to move out of their starter homes because the “next step” homes are coming in over $200,000, at $220,000 or so. Thus, those looking for a starter home are also stuck in apartments that may not be so affordable. But bankers say they have a lot of customers who could qualify for those second homes if they were under $200,000. Rising building material costs and interest rate hikes will not help that cause. The cost of money has been very low for a long time. A sustained increase may help Wall Street but it may hurt Main Street.

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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Corrow joins Farrish

Attor ney Kenzie J. Corrow has joined Farrish Johnson Law Office. A native of the Mankato area, Corrow a t t e n d e d Cleveland Public Kenzie J. Corrow School and then Saint Mar y’s University of Minnesota in Winona. Corrow received her law degree from Mitchell Hamline School of Law. She will be focusing her practice in the area of family law. ■■■

Pub 500 honored

Pub 500 was honored for its community fundraising by the Minnesota Restaurant Association. A few years ago, owner Tom Frederick started advertising an event center and began giving away “Pub Bucks.” Pub Bucks are gift certificates for the Pub given to specific charities. The charities can then sell the certificates for whatever price they wish (typically at a discount) and keep 100 percent of the proceeds. Since beginning the program in 2012, Pub 500 has given away close to $20,000 per year worth of certificates. Pub 500 also donates or heavily discounts catered food for community events, donates items to various silent auctions and holds donation drives for Toys for Tots and Santa’s Little Helper.

BUSINESS BANKING

MN Valley Business • JANUARY 2018 • 5

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Clinic honored

Mankato Clinic has been named a 2017 Guardian of Excellence Award winner by Press Ganey. The Guardian of Excellence Award recognizes top-performing health care organizations that have consistently achieved the 95th percentile or above of per formance in employee engagement. After meeting with groups of employees, Mankato Clinic made several changes as a result of the feedback they received from staff. Changes included enhancing employee recognition programs, focusing on teamwork and improving on ways to better involve employees in decisions which affect their work, which helped the clinic achieve the award for employee engagement. “As a service organization, we know that having an engaged workforce is essential to our success,” CEO Randy Farrow said.

Veterinarian honored

St. Peter veterinarian Darwin Reicks received the Science with Practice Award from Iowa State University’s College of Veterinary Medicine. The award recognizes exemplary integration of science and the art of veterinary practice to benefit swine productivity and welfare. Reicks is owner of Reicks Veterinar y Research & Consulting. He is a licensed veterinarian in Minnesota, Iowa, South Dakota, Nebraska, and Wisconsin. For 23 years, he has worked with boar studs and swine semen analysis. Reicks was one of the early innovators in air filtration for disease control.

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True Realty adds three

Beth Leonard

Tyler Meihak

Tr ue Real Estate has added three agents Beth Leonard, Jamie DeAtley and T yler Meihak - at their M a n k a t o location. L e o n a r d Jamie DeAtley comes with more than 13 years of experience, specializing in relocation and residential sales. DeAtley is a Mankato native with 20 years buying, renovating and selling her own properties. Meihak has lived in Mankato most of his life and graduated

from Minnesota State University with a major in Urban & Regional Studies. ■■■

Lurken named Gislason partner Jennifer Lurken has been named a par tner to Gislason & Hunter located in Mankato and New Ulm. Lurken is an experienced litigator with Jennifer Lurken an emphasis on bankruptcy, banking, civil litigation and employment law.

Blethen, Gage & Krause is pleased to announce our newest partners, Kimberly Literovich and Paul Shneider. Both Kim and Paul specialize in Business Law, Estate Planning, and Real Estate Law. We are proud of our new partners’ hard work and dedication to the firm and their clients.

Kimberly A. Literovich

Paul R. Shneider

TEAMWORK

MN Valley Business • JANUARY 2018 • 7

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Business Commentary

By Dean Swanson

Outsourcing your small business’s sales efforts H

ere is an interesting question that I got from a small business CEO recently. “I really need to grow my business this next year, but I am not a good sales person because I have tried and tried to do it myself and it isn’t working. What can I do? Is this something that I could outsource?” If you’re not a natural born salesperson and aren’t confident in your ability to become one effective enough to grow your small business, you might consider outsourcing your company’s sales efforts, but consider the pros and cons. There are advantages and disadvantages to outsourcing sales initiatives, so give it careful thought before putting your business’s sales function in the hands of someone outside of your company.

Some of the potential pros of outsourcing

Cost-effectiveness Because subcontractors aren’t on your payroll, you’ll have more flexibility in expanding and contracting sales activities to accommodate seasonal highs and lows. In addition, you won’t have the expense of paying payroll taxes (or certain benefits) like you would with hiring an employee. Expertise in countering resistance Skilled sales subcontractors will have experience in dealing with hesitation from leads. With familiarity of the nuances of managing resistance, they know how to keep the lines of communication open rather than

pushing back too hard and scaring off prospects. Shortened sales cycles Seasoned sales professionals will know what it takes to close a sale. They’ll feel comfortable with the sales process and are typically adept at working through it efficiently to secure commitment from prospects.

Some of the potential cons

Lack of familiarity with your brand’s persona Subcontractors may not be in tune with the core values and culture of your small business. Therefore, they may not intuitively be effective at authentically representing your brand. Confidentiality risks Any time you make someone from outside of your company privy to confidential or proprietary information, you put your business at some risk of having your ideas or plans getting out to your competition. It’s important to consider securing agreements to protect your company. Less control over relationship building When you outsource contacting prospects and nurturing relationships, customers may feel more loyalty and a stronger connection with the subcontractor than they do with your brand. If at some point you part ways with the subcontractor, you may find it challenging to step in to maintain relationships with the prospects and clients the subcontractor has built rapport with.

8 • JANUARY 2018 • MN Valley Business

Now having said all that as a direct answer to this CEOs question, I want to help this CEO with a bigger picture look at the issues. Because, when you’re running a business it’s easy to make excuses for NOT doing things and convince yourself that you are doing all that needs to be done. But such excuses may be the very thing holding you back. If you want to do more than just get by you’ll need to stop avoiding action and start taking it. I will relate what I learned from Daniel Kehrer, Founder & Managing Director of BizBest Media Corp. He quotes a highly successful CEO as saying “Simply hoping that sales will improve is the wimp’s approach. You can’t wait for all conditions to be perfect because they never will be. You have to take action at some point.” Here are some top inactionexcuses that Kehrer summarizes: The timing isn’t right People who constantly succumb to this excuse are “prisoners of hope.” They’re always waiting for something else to happen before “pulling the trigger” and end up never acting. Millions of would-be entrepreneurs, for example, are waiting for just the right conditions – funding, free time, a better economy. And all the time they’re waiting, opportunities are passing them by. We tried that already Small business owners most often utter these words in relation to marketing. Maybe they spent a bundle on a TV commercial once and it didn’t

work. Or an online deal offering resulted in a loss. But marketing is far from certain and often difficult for small companies to predict. Without proactive, longterm and consistent marketing, businesses die. If only I had [fill in the blank] For business owners and especially startups, there are always a million “if-only-I-hads.” And often they involve technology. But if you examine the situation closely, you might find there’s another way. I’m still working on a plan There’s nothing wrong with planning. You need to be prepared. But endless planning that replaces the reality of execution results in stagnation. It’s a good idea but things are different now This kind of thinking often results in “moving the target” because you lack certainty or perhaps just the motivation to move ahead. You have a plan and are ready to act, but pull back and reassess for one reason or another. Moving the target changes the objective, goal or focus of your business and thus delays plan execution, innovation or change. And every time you move the target, you have to prepare all over again. I’m in a defensive posture The hardest risks for cashstrapped business owners to take are often financial. Many choose to cut costs and “do more with less” when what they really need to do is hire new talent, invest more heavily in marketing, upgrade technology or something else.

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County Road 12 extension aerial

Eastward Ho! East side hopping with development By Tim Krohn | Photos by Pat Christman

t was another strong year for development in 2017 with a solid housing market and array of public road and utility projects that are opening vast areas for private commercial and residential development. That development will explode this spring as many of those public works projects are finished or nearly so. Much of this year’s building will be east of Highway 22 from the new Prairie Winds Middle School up to the back side of the Kohls store. A major development that includes housing, offices, a hotel and businesses is beginning on land directly behind Kohls. Other areas in the Prairie Winds development will see more housing, including senior living, going up.

Mankato City Manager Pat Hentges said public infrastructure projects on the east side are driven by private development demands. “There are a couple in Prairie Winds and in Creekside, (which is east) of Highway 22, and the area north of August and south of the Wickersham campus. “Those are the big private development projects that will add some opportunities.” In North Mankato, housing was strong and the city added land and industries to its industrial park. “We’ll probably hit about $28 million in new construction this year,” said North Mankato Administrator John Harrenstein. While construction continues to hum, other

Cover Story

10 • JANUARY 2018 • MN Valley Business

Birchwood Cottages, a 24-unit memory care facility, is going up on the corner of Lee Boulevard and Lor Ray Drive in North Mankato. indicators are also up. Hentges said population growth – at about 2.5 percent annually - has been stronger than the state had predicted. And people are spending on big-ticket items. Auto sales in Mankato, through the first 10 months of last year, were up nearly 8 percent compared to the same period a year earlier, with 10,057 units sold. Realtors say housing demand is strong but the stock of available homes has been limiting sales. Through the first 10 months of last year, existing home sales were up nearly 3 percent compared to the same period a year earlier, for a total of 1,847 home sales.

Strong, sustainable market

While downtown Mankato projects continue to happen – including a seven-story building being started this year – and infill continues on the hilltop area, it is the former farmlands on the east edge of Mankato that is the focus of intense expansion. “There is upwards of $7 million in infrastructure – roads, sewer and water,” Hentges said. He said the Adams Street extension, which will bring the road from the side of the hilltop Hy-Vee out to County Road 12, will open a lot of land for development. “That opens up considerable acreage there. We’re really well-positioned for job-creation land. But I don’t expect to see much building happening there in 2018 because it’ll be mostly road construction (this) year.” There is also land and some vacant buildings available along the east side that could attract commercial/industrial developments. The former Gander Mountain/Gordmans building and the Sears space in the mall are vacant and there are lots available along East Victory Drive and in the Eastwood Industrial Park. He said there’s been a lot of infill projects across the hilltop area, which is creating the increased density

that planners want. “The existing market on commercial seems strong. Other than Gander Mountain-Gordmans and Sears, you really don’t see a lot of vacancy in the strip malls. You see them over the last few years reconstituted — changing space configurations. Old Country Buffet is an example of that.” One of the spaces in the former restaurant is being remodeled into a restaurant. Downtown and Old Town are also seeing a continuation of infill and redevelopment. One of the big projects coming this year is a new seven-story building on the corner of Main and Second streets in downtown Mankato. Being built by Tony Frentz and Rob Else, the $19 million building will house Eide Bailly and other offices, as well as a restaurant and a top floor event center. Frentz has been out of the construction business in recent years as he’s focused on the Neutral Path Communications business, which has laid thousands of miles of fiber lines. But Frentz said he likes what he sees in the region when it comes to development. “There seems to be a ton of development going on. We’re growing quite a bit as a community. The area behind Madison East is looking very good. There’s building going on all over,” Frentz said. “The only thing now is the labor market. It’s really tough if you’re looking to hire someone right now.” Hentges said he also expects developer Mike Brennan will be coming forward with a more complete proposal for his proposed Bridge Plaza building on the former Embers site, next to the library on Riverfront Drive. Later this year Hentges expects plans to firm up for redevelopment along Sibley Parkway. “Housing and mixed use there. I suspect we’ll get a lot of interest for affordable housing but some other mixed use, too.” Housing construction continues but Hentges said

MN Valley Business • JANUARY 2018 • 11

the trends he’s seeing suggest that may level off a bit. “But we’re still building a couple hundred multi-family a year, independent living or market rate multi-family. Mankato is seeing an average of more than 100 single-family town homes or houses a year. “I think there will be another subdivision coming in that might boost that even more.”

Multi-family big in North Mankato

While the overall housing construction has been booming in North Mankato, new singlefamily home construction wasn’t at the pace city leaders – or Realtors – would like to see. “We had 19 single-family homes. We’d prefer to be in the 30 new homes range,” Harrenstein said. Realtors have said they have plenty of eager buyers but there’s a shortage of existing homes listed for sale. Part of the reason for that, they say, is there are fewer new homes being built so

John Harrenstein fewer people are moving up to a new home and selling their existing home. But Harrenstein said a few development expansions — including a 30-lot addition by Hiniker Homes north of Benson Park, KWS opening five lots in The Reserve on the north edge of the city, and potentially one by Marie Lane — will accelerate

12 • JANUARY 2018 • MN Valley Business

building this year. “Hopefully we’ll replenish some inventory,” he said. “We have to look at what we can do to get back in that 30-home area, but 20 homes isn’t a bad year given the atmosphere right now.” But things are booming in multi-family constr uction, including apartments, condos, senior living and memory care units. “We built 70 new multi-family, which is more than we’ve built in the past five years combined. One of those developments is Birchwood Cottages, a 24-unit memory care facility going up on the corner of Lee Boulevard and Lor Ray Drive on the former Tschohl property. “We had a good year in housing, but we would like to see singlefamily increase.” On the commercial-industrial side, expansion continues in the city’s Northport Industrial Park north of Highway 14 on the northwest edge of the city. Palmer Bus Service and Blue Star Power Systems committed to

building new facilities. The city sold 25 acres in the park for the developments and then purchased 25 additional acres for future developments. That’s on top of 25 acres of open land currently available in the park. “There was no added debt for the land in Northport. The sale of the land paid (for the acquisition of more land),” he said. Another company, Building Fasteners, also bought some land in Northport with plans to build a new 16,000-square-foot facility. D&K Powder Coating and UPS also did expansions of their facilities last year. As for public infrastructure, Harrenstein said they are planning for a major Commerce Drive resurfacing project slated to happen in 2019 or 2020. The city will be creating a master plan for the project, similar A backhoes starts work on an area of land behind the Kohl’s store that will see a burst of to what they’ve been doing for the development this spring Belgrade Avenue area. They will also be rebidding several years of reconstruction housing developments pan out. work on the Spring Lake pool this coming. One is Marie Lane west of year. The city is also looking at Lookout Drive and Anchorage Jefferson Avenue will see potentially extending two roads if Drive north of Benson Park. MV

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Laura Doyen, owner of Design and Wine, shows her students how to remove an outline of a stencil during a class at the store.

Getting creative Design and Wine open in North Mankato By Nell Musolf Photos by Jackson Forderer

oes anything sound more appealing on a blustery winter day than getting together with some friends and doing a little crafting? Laura Doyen doesn’t think so. Doyen, owner of Design & Wine, 300 Belgrade Avenue in North Mankato, has long been a fan of the craftier kind of arts. “Ever since I was 19 I’ve been participating in the holiday craft sale at Madison East,” Doyen said. “I’ve always been artsy and when my mom suggested we try to earn some Christmas money at the craft sale, I decided to give it a try.” That interest in art eventually led to the creation of Design & Wine, a business that caters to people who want to be creative along with a group of friends. Led by

Doyen, customers create a customized piece of art on wood, canvas, mixed media or string art. Doyen hit on the idea of hosting art parties after visiting a friend in Rochester and going to a similar kind of event. It was a business that appealed to Doyen’s entrepreneurial spirit. “When I went to that party in Rochester I thought Oh my gosh, Mankato needs something like this,” Doyen said.

Cover Spotlight

14 • JANUARY 2018 • MN Valley Business

Her own place

But before she could hit the ground running Doyen had to come up with a game plan. “My dad asked me ‘what’s going to be your biggest expense if you start your own business?’ I thought about it and told him

Top to Bottom: 1) Beth Hinrichson (left) dabs a stencil on a piece of wood during a class at Design and Wine while her daughter Kara Hinrichson, 9, looks on. 2) A wall at the Design and Wine store in lower North Mankato is covered with various pieces of art, either painted on wood or canvas. 3) Design and Wine owner Laura Doyen helps her students by putting stencils onto sticky paper and cutting each piece off during a class at the store. Doyen said she holds private and public workshops that includes wood palette art, canvas painting, string art and mixed media.

easels. I knew I was going to need a lot of easels. Two days later he gave me 22 easels he’d made himself,” Doyen said. When Doyen first opened her business in October of 2014 she traveled to clients’ homes to host her art parties. But as her clientele grew she began to think about finding a place where she could lead classes and keep her art supplies and have the party come to her. “Packing up the art supplies got to be a lot more work as we got bigger,” Doyen said. “The canvases and the paints were easy to pack up but the wooden pallets were a lot harder.” Doyen and her husband, Ryan, began looking for a permanent space and decided that a corner storefront on Belgrade was ideal. “This spot couldn’t be more perfect,” Doyen said. “We’ve got a lot of restaurants in the area where people can go to eat first and then come here for a crafting event. I can’t believe how perfect this space is.” The Doyens have furnished the storefront with sturdy art tables and stools made by Ryan. Wooden pallets are stored in the back along with the rest of the art supplies Doyen provides. Doyen doesn’t think she could have gotten to her current point without her husband’s support. “He’s absolutely amazing,” Doyen said. “He designed our website and he do so many other things for the business.” Doyen believes a big attraction of going someplace other than one’s home to do art work is not only the communal feeling of creating with other people but also the fact that there’s no mess, for the clients, to deal with afterwards. “I can’t tell you how often I’ve heard people say that they’ve always wanted to do craft projects but they don’t want to go out and buy a lot of supplies that they’ll only use once. We also clean up the mess afterwards which is something else I think a lot of people appreciate.” When Doyen first began Design & Wine and was traveling to peoples’ homes to lead her craft parties her clients often provided wine for their guests. The Doyens

are working on getting a permit where people will be able to bring a bottle of wine to craft parties and expect that will happen sometime in 2018. “People can bring their own snacks or go out for a drink and appetizers before coming in to create,” Doyen said, “but we don’t serve wine. That was never our intention.” People interested in setting up an event contact Doyen through Design & Wine’s website, www. designandwinemn.com. Design & Wine hosts private parties and public events. An average private party has 10 guests while public events usually have 15 to 20 participants. “Although during Bells on Belgrade I really think there must have been a 1000 people coming through the door that day,” Doyen said. “I couldn’t believe how many people we saw.” Costs for an event are in the $35 to $45 range and include all supplies. Classes are led by Doyen or Andrea Wahlstrom, an artist subcontracted by the Doyens. “Before the event the host decides on what they want to work on—wood pallets, canvas, mixed media or string art,” Doyen said. “If the party is going to be painting on wood pallets each guest will select their own pallet since some people like the rustic ones with lots of knot holes and others want smoother pallets. People choose the colors they want to use, styles, everything. I help them figure it out.” The pallets used by artists are built by Doyen and her husband. Doyen gets plenty of help from the rest of her family as well. “My mother-in-law and my mom are always in here helping me out. Our kids are so helpful too,” Doyen said. The Doyens have three children, Mackenzie, Layla and Chase. “It’s definitely a family affair,” Doyen said. MV

MN Valley Business • JANUARY 2018 • 15

Joel Holtmeier added a quarry to the Holtmeier Construction holdings to become more diversified.

Moving Heaven and earth

Contractor credits employees and faith for success

By James Figy | Photos by Pat Christman

ff the top of his head, Joe Holtmeier can list the four jobs Holtmeier Construction did in 1998 during its first year in business. The sewer and water projects in Mapleton, Glencoe, Chaska and Courtland were too small to appeal to bigger contractors, but the right size for the fledgling company. He and his wife, Bethany, were the only employees on the first project, installing water service at the Mapleton High School addition. Now with roughly 80 employees, Holtmeier Construction is one of the preeminent heavy construction contractors in southern Minnesota. The company has flourished over 20 years through hard work, faith and flexibility. “In construction, you have to have a plan, but things are going to change,” Holtmeier said. “You have to be flexible and adapt. And if you can do that, you’re going to do well, and if you can’t get past it, you better find something else to do.”

Building from the ground up

The company’s Mankato headquarters boasts a twostory office building and two giant garages where employees maintain massive earth movers. That first year, however, the office was a little smaller, according to Bethany Holtmeier. “We bought a farmhouse — it was built in 1892 — and that’s where we started,” she said. “That’s where I did the accounting, and that’s where Joe did his calls and sometimes begged people for work. And lots of doors shut, but enough opened.” Joe always loved heavy machinery as a kid, and his first job working with the equipment was during high school in Waconia. He continued the work as he studied construction management at Minnesota State University. Though not from the area, he decided to stay and work for a company after meeting Bethany, who studied education at MSU.

Profile

16 • JANUARY 2018 • MN Valley Business

Joe and Bethany Holtmeier began their construction company in 1989. employees can return home each night. The company has diversified to claim a larger market share within that radius, and it expanded by purchasing a limestone quarry. “It’s hard to say what will happen next, but we’re certainly open to getting into other things if we think we can do a good job and be competitive,” he said.

Giving back to the community

Reclaiming limestone in one of Holtmeier’s quarries. After construction season finished for the winter in 1997, the young married couple and their eldest child visited family in Colorado. There they decided to start a company. Joe would handle the work, and Bethany would manage the books. “Pretty much everyone told us we were crazy and would never make it and, ‘You’re going to fail within a year,’” Bethany said. “But sometimes that makes you try a little harder, when people say you can’t.”

Growing the company

Competitive bid projects for municipalities provide the bulk of Holtmeier Construction’s work. This includes excavating and running water and sewer lines for new buildings and road

reconstructions — including recent projects in Farimont, Fairbault and the Adams Street extension in Mankato. While adding employees and equipment, the company has also tackled larger projects and taken on a larger role. Holtmeier serves as general contractor for most projects, which presents benefits and challenges. “Not only are you responsible now for your own portion of the work, but you’re responsible for what the subs are doing on your jobs,” Holtmeier said. “But to be in control of your own destiny, you need to be a general contractor, more so just with scheduling because you can decide when things happen.” Holtmeier pursues work within just 60 miles of Mankato so

The Holtmeiers see the growth of their business and its revenue as a blessing and an imperative to help others. They drive a large pink dump truck to local fundraisers and give monetary donations. They bring heavy equipment to the Children’s Museum of Southern Minnesota to teach kids about construction. In recent years, they donated site work for an addition at Peace Lutheran Church in North Mankato, and Holtmeier spoke to the church’s preschool students and gave each a turn in the backhoe. They also donated clean up and site work for St. James Evangelical Lutheran Church and School in Northrop after it burned to the ground. “Our employees have done such a good job and put us in a position where we can do those things,” he said. “We’re so thankful for the employees. It’s not us, but the Good Lord has given us the resources, especially the employees, so that when needs come up we can say, ‘We can help with that.’ ” MV

MN Valley Business • JANUARY 2018 • 17

Anders Bjorling with a photo he took while on a recent trip to the Boundary Waters Canoe area.

Capturing the moment

Bjorling finds second career in photography By Dan Greenwood Photos by Pat Christman

nders Bjorling began experimenting with photography as a child in his native Sweden, tinkering with his father’s camera. At the age of 14 he rigged a black and white scene with some rocks, a comb and a matchbox to fiddle with time exposure. When it finally worked, he was hooked on the magic of taking and developing pictures. But it wasn’t until after his retirement decades later that he was able transform that hobby into a profession. Bjorling and his wife, Janet, founded Swedish Kontur Imports in 1962, a Scandinavian store in St. Peter that the family still owns today. There they offer • JANUARY 2018 • MN Valley Business

handmade Scandanavian crafts, food, clothing, home décor, household wares and Bjorling’s enlarged photographs of wildlife, exotic cultures and landscapes. After retiring from a long career at Gustavus Adolphus College in 1999, Bjorling rekindled his passion for photography, and the digital age simplified the process of developing film that he had grown up with. “I had a darkroom at home that I never had much of a chance to spend in. It’s a time consuming process with the chemicals and rinsing,” Bjorling explained. “I was going to dust that off, but then digital came. Today, digital is just as good as film.”

Feature

Minnesota’s beauty

Some of Bjorling’s photography work is available at the Swedish Kontur store.

The Swedish Kontur store in downtown St. Peter has been a popular destination since Bjorling and his wife, Janet, opened it in 1962 He just returned from a trip to Costa Rica capturing some of the country’s 900 species of birds. Over the years he’s developed intimate images of grizzly bears in Alaska, lions in Tanzania, the landscapes of Iceland and his native Sweden, and the people of India and Nepal. “I take pictures of what I’m interested in, especially beautiful things like landscapes, birds and bears.” Occasionally he’s drawn to portraits of indigenous people. While some cultures are flattered to have their pictures taken, others view it with suspicion. “The most difficult place was Morocco, where women especially did not like to be photographed,” Bjorling said.

He discovered that a lot of people in Morocco and elsewhere believe that when someone takes your picture, they also take your soul. “If they hold their hands up or say no I respect that,” Bjorling said. “The same thing with animals, I don’t want to disturb them or make them feel like they are being harassed.” That wasn’t a problem during a visit for the salmon run at Katmai National Park in Alaska. They grizzly bears were so focused on catching fish they would allow Bjorling to get within six feet of them to get a good shot. “The only thing you need to be careful with is that you don’t surprise them,” Bjorling said.

Despite his global travels, some of his favorite pictures were taken right here in Minnesota. The Vince Shute Wildlife Sanctuary in northern Minnesota attracts hundreds of black bears every year as they search for food. Bjorling says his wife Janet opted for the safety of the viewing platform while he set up his camera on the ground surrounded by the 300 pound animals. “There was one big old one they called Scarface,” Bjorling said. “He turned his head and glared at us. That was uncomfortable, but he just kept going.” Bjorling is mostly self-taught but he did attend some workshops with some world renowned photographers, like Minnesota’s own National Geographic photographer Jim Brandenburg. “I had always admired his photography,” Bjorling said. Bjorling accompanied Brandenburg to photograph the natural wonders of Iceland about 15 years ago; they were joined by two other world-renowned photographers, David Muench and Tom Mangelsen. “To get all three of them in one workshop was fantastic, and it’s the only one (workshop) that Brandenburg ever did, so I lucked out,” Bjorling said. Since then, Bjorling’s photographs have been on display at exhibits across the country. But one of the pictures he’s most proud of can be found hanging from the walls of Swedish Kontur in St. Peter. It’s a shot of Gaskin Lake in the Boundary Waters Canoe Area at dawn, with the fog hanging still over the water. As for his favorite local spot for inspiration? “At Gustavus Adolphus College they have a beautiful arboretum and there are lots of wonderful photo opportunities. I probably spend more time there for photographing than any other place.” MV

MN Valley Business • JANUARY 2018 • 19

■

Business and Industry Trends

Energy Wind turbines taller

Wind turbines in the United States have grown in both average height and capacity over the past decade, according to data on utility-scale electricity generators. Wind turbine capacity is based largely on the length of the blades, and taller turbines are able to not only have longer blades, but they also can take advantage of the better wind resources available at greater heights. Wind turbines accounted for 8 percent of the operating electric generating capacity in the U.S. in 2016, surpassing hydropower as the renewable technology with the largest installed generating capacity. However, because of the way wind and hydropower electricity generators operate, hydropower still provides more electricity than wind does, totaling 7 percent and 6 percent respectively. The largest turbines currently installed in the United States have generating capacities of 6 megawatts (MW). These turbines are part of the Block Island Wind Farm in Rhode Island, the only operating utility-scale offshore wind turbines in the United States. Two offshore wind farms are planned to come online in the near future: the Icebreaker Offshore Wind project on Lake Erie near Cleveland, Ohio, in 2018 and the Coastal Virginia Offshore Wind project in Virginia in 2021.

20 • JANUARY 2018 • MN Valley Business

Coal use shrinking

Coal’s share of total electricity generation in the South declined over the past decade, from 50 percent in 2006 to 29 percent in 2016. As the use of coal has declined, the use of natural gas has increased. In 2016, southern states used natural gas for 42 percent of their electricity generation, a bigger share than the U.S. average of 34 percent. The mix of fuels used to generate electricity varies among southern states, but the overall mix is dominated by natural gas and coal. At the state level, natural gas made up as much as 89 percent of in-state electricity generation in Delaware to as little as 2 percent in West Virginia. Competition between the fuels for electricity generation has resulted in U.S. net generation of electricity from natural gas surpassing coal for the first time in 2016. For the South as a whole, natural gas surpassed coal for electricity generation in 2012, 2015, and 2016.

Oil cos. pay down debt

Financial results for 54 publicly traded U.S. oil and gas producers indicates that these companies, in aggregate, were paying off debt while funding investment through the sale of assets and the issuance of equity. In recent years, investment had been more heavily funded through the issuance of debt. Although

revenue for these companies has grown over the past year with higher oil prices, net cash from operations has grown more slowly because of increased upstream costs. The 54 companies included in the analysis are listed on U.S. stock exchanges and are required to submit financial reports to the U.S. Securities and Exchange Commission. They operate largely in U.S. onshore basins, but some also have operations in the Federal Offshore Gulf of Mexico, Alaska, and various other regions across the globe. For these publicly traded companies, capital expenditures on exploration and development totaled $16 billion in the quarter, $8 billion lower than the 2012–16 quarterly average spending related to these activities by these companies.

Economy Strong year end

After a couple of months of hurricane -related volatility the latest report on payrolls provided the first largely untainted reading of the labor market since summer. Late in the year, a closely-watched index of servicesector activity reached the highest level on records dating to 2008, reflecting an economy that has been firing on all cylinders lately. Services – such as construction, mining, transportation, retail, insurance and real estate - make up about 80 percent of the economy. Consumers have been reaching for their credit cards more frequently over the past year or two as a result of solid job and income growth. That has added to steady increases in auto and student loans. The trend has slowed somewhat in recent months, possibly because rising delinquencies by less creditworthy borrowers have prompted some lenders to tighten their standards. Still credit levels remain in healthy territory.

GDP up 3.3%

Real gross domestic product (GDP) increased at an annual rate of 3.3 percent in the third quarter of 2017, according to the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.1 percent. Real gross domestic income increased 2.5 percent in the third quarter, compared with an increase of 2.3 percent in the second. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.9 percent in the third quarter, compared with an increase of 2.7 percent in the second quarter. The increase in real GDP in the third quarter reflected positive contributions from PCE, private inventory investment, nonresidential fixed investment, and exports that were partly offset by a negative contribution from residential fixed investment.

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2016 - 2017 1,418 915

1500 1200 900 600 300 0

Source: Sales tax figures, City of Mankato

Sales tax collections Mankato (In thousands)

- 2016 - 2017

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

600

$421

500

$447

400 300 200 100 0

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato - 2016 - 2017 70000

$56,967

$51,510

52500 35000 17500 0

Source: City of Mankato

Mankato food and beverage tax - 2016 - 2017 175000 140000

$66,700 $64,186

105000 70000 35000 0

Source: City of Mankato

C. Sankey

MN Valley Business • JANUARY 2018 • 21

■

Agricultural Outlook

By Kent Thiesse

Pressure on to increase CRP acres in the next Farm Bill

everal Congressional hearings and listening sessions on the next Farm Bill were held in 2017 across the United States. One of the major items of discussion has been the Conservation Title of the Farm Bill, or more specifically the Conservation Reserve Program. The CRP program has been highly popular over the years, and many farm organizations, environmental groups, and wildlife supporters are pushing for an increase in the maximum allowable CRP acreage above the limit of 24 million acres in the current Farm Bill. The CRP program was developed as part of the 1985 Farm Bill. The CRP program has been the largest and most important conservation program in the United States since that time, making major contributions to national efforts to improve water and air quality, prevent soil erosion, protect environmentally sensitive land, and enhance wildlife populations. Following initiation of the program, CRP acreage quickly rose to over 30 million acres by 1990, and then increased even more, to around 35 million acres by 1993-1995, before dropping off slightly following the 1996 “Freedom-toFarm” Farm Bill. CRP acres then began to increase again in the late 1990’s, reaching a peak of 36.8 million acres in 2007. During a 10-year period from 2007 to 2016, CRP acreage declined by 12.9 million acres or 35 percent, ending 2016 with 23.9 million acres. The reduction in CRP acres was due to high crop prices, strong farm income levels, and mandated reductions in maximum CRP acreage in the past two Farm Bills. The 2007 Farm Bill reduced the maximum CRP acreage from 37 million

acres down to 32 million acres, and the last Farm Bill reduced the maximum CRP acreage even further, down to current maximum level of 24 million acres. The reductions in the maximum CRP acreage were made to encourage more acres to return into crop production, to target CRP acres toward more environmentally sensitive land, and to reduce the federal budget outlay for the CRP program. As of Sept. 30, 2017, there was a total of just over 23.4 million acres enrolled in the CRP program, which is down from near 27 million acres in 2013, and over 31 million acres in 2009. Currently, there are 16 million acres under

22 • JANAURY 2018 • MN Valley Business

General CRP contracts, just below 56 million acres under Continuous CRP contracts, slightly over 1 million acres under Conservation Reserve Enhancement Programs (CREP) contracts, and slightly over 400,000 acres in special CRP programs. There are currently over 638,000 CRP contracts in place, on over 358,000 farms. CRP acreage added in 2017, included 1.17 million acres through the Continuous CRP program, 390,000 acres as part of General CRP enrollment, and 511,000 acres as part of a special Grasslands CRP sign-up. CRP sign-up was restricted during 2017, due to total CRP acreage nearing the maximum level of 24

million acres. CRP contracts expired on about 2.5 million acres in the U.S. on September 30 and will expire on additional 1.5 million acres in 2018 and 1 million acres in 2019. However, the CRP expirations increase substantially in the years follow, increasing to 4.4 million acres in 2020, over 3 million acres in 2021, over 4 million acres in 2022, and approximately 2 million acres in 2023. Minnesota had 97,342 acres expire in 2017, and will have 201,294 acres expire in 2018. The expiring 2017 CRP acreage in other area States was 214,572 acres in Iowa, 326,662 acres in North Dakota, 46,138 acres in North Dakota, and 43,843 acres in Wisconsin. Expiring CRP acreage in 2018 includes 157,560 acres in Iowa, 21,588 acres in North Dakota, 50,951 acres in South Dakota, and 27,974 acres in Wisconsin. The average CRP land rental rate in the U.S. in 2017 was about $77 per acre, with an average of $52 per acre on General CRP acres, $128 per acre on Continuous CRP acres, and $151 per acre on CREP acres. CRP rental rates vary widely from state-to-state and within different regions of a given state. The current average CRP rental rate in Minnesota is just over $107 per acre, with an average of $70 per acre on General CRP acres, and $138 per acre on 8 Continuous CRP acres. Most CRP annual land rental rates in Southern Minnesota are considerably higher than the 6 State average rate. The current average CRP rental rate in Iowa is $202 per acre, with an average rate of $136 per acre 4on General CRP acres, and $244 per acre on Continuous CRP acres. It has been pointed out that the average 2 CRP rental rate in Iowa has increased by approximately 30 percent since 2014, while the average farm land value in Iowa has dropped by about 17 percent 0 J same F Mtime A period. M J J A S O N D during that

Looking Ahead to the Next Farm Bill

As mentioned earlier, there has been a strong push 8 during the past year to increase the acreage cap in the 100 CRP program above the current 24 million acreage limit in 6 the next 85 Farm Bill. Some wildlife and environmental groups4 have advocated raising the CRP limit to as high as 35-40 70million acres, while ag organizations and others have called for more moderate increases in CRP acreage. 2 55 However, not all parties are on-board with increasing CRP acreage in the next Farm Bill. 40 0 J several F M Amajor M water J J quality A S initiatives O N D There are going on across the U.S., including in the Mississippi and 25 J F M A M J J A S O N D Minnesota River basins in the Upper Midwest. The Continuous CRP and CREP programs have been useful to take some environmentally sensitive and out of production, in order to enhance water quality efforts. Some ag leaders 100 to higher crop production levels and very large also point U.S. grain surpluses, which have resulted in fairly 85 consistent low commodity prices in recent years, as a reason70to increase CRP acreage in the coming years, in order to reduce the number of available U.S. crop acres. 55 groups that support young farmers and ranchers Some are concerned that increasing CRP acreage will make it 40 more difficult for beginning farmers to have access to land resources in some areas. They point to the reduced 25 F land M that A would M J be J available, A S O amount ofJcrop and Nthe Dvery competitive CRP rental rates being paid by the Federal government, as reasons for their concern. Looking ahead, advocates for keeping the CRP acreage cap at the current

Agriculture/ Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2016 — 2017

20 16

$3.04

2 0

$2.89

Source: USDA

Soybean prices — southern Minnesota

(dollars per bushel)

— 2016 — 2017 8 20 100 16 6 85 $9.19 12 470 8 255 $9.07 4 40 0 0 J F M A M J J A S O N D 25 J F M A M J J A S O N D J F M A M J J A S O N D Source: USDA

Iowa-Minnesota hog prices

185 pound carcass, negotiated price, weighted average

— 2016 — 2017

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

Milk prices

25 22

$61.22

19 16

$45.10 J A S O N D J A S O N D J A S O N D Minimum prices, class 1 milk Dollars per hundredweight

— 2016 — 2017 25 22

$18.56

19 16

$17.40

13 10

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

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

C. Sankey

MN Valley Business • JANUARY 2018 • 23

13 10

Construction/Real Estate Residential building permits Mankato

Commercial building permits Mankato

18000

12000

- 2016 - 2017 (in thousands)

$5,255

13500

10000

$2,968

8000

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

206

240

$165,000

200

192

$161,250

150

180

100

120

0 J

Source: Realtors Association of Southern Minnesota

Source: Realtor Association of Southern Minnesota

Interest Rates: 30-year fixed-rate mortgage

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

Housing starts: Mankato/North Mankato

— 2016 — 2017

- 2016 - 2017

5.5

5.0

4.5

3.9%

4.0

3.5 3.0

$1,279

4000

4500

$1,028

6000

9000

4.0% O

10 N

Source: Freddie Mac

Source: Cities of Mankato/North Mankato

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New Building in Mankato

24 • JANUARY 2018 • MN Valley Business

Owner/Developer

(507) 380-1964 (507) 317-4822

Gas Prices

Gas prices-Mankato

— 2016 — 2017

54 43 $2.35

32 21 10 0

O $1.95 N D

Gas prices-Minnesota

— 2016 — 2017

5 54 $2.40

43 32 21 10

$1.99

C. Sankey

Source: GasBuddy.com

Stocks of local interest

Nov. 7

Dec. 5

Percent change

Archer Daniels

$39.54

$40.98

+3.6%

Ameriprise

$159.23

$164.08

+3.0%

Best Buy

$55.13

$61.32

+11.2%

Crown Cork & Seal

$59.79

$59.66

-0.2%

Consolidated Comm.

$14.34

$12.59

-12.2%

Fastenal

$48.08

$53.43

+11.1%

General Growth

$22.20

$23.59

+6.3%

General Mills

$50.97

$57.22

+12.3%

Itron

$67.00

$66.15

-1.3%

Johnson Outdoors

$70.89

$70.50

-0.6%

$230.05

$238.05

+3.5%

Target

$57.89

$61.58

+6.4%

U.S. Bancorp

$53.45

$54.65

+2.2%

Winland

$1.30

$1.35

+3.8%

Xcel

$50.03

$51.02

+2.0%

level also point to the fact that 11.6 million acres will expire from 20202022, which would be during the time period of the next Farm Bill, and is nearly half of the current acreage limit. They feel the current acreage limit will offer adequate opportunities to enroll environmentally sensitive crop land into the CRP program in the next five years. Probably the biggest challenge with increasing the maximum CRP acreage in the next Farm Bill is the cost factor of adding more CRP acreage. The total Federal budget outlay for the CRP program in the fiscal year that ended on September 30, 2017 was just over $1.8 billion, which included just under $1.6 billion in CRP annual rental payments. Based on the current U.S. average CRP rental rate of approximately $77 per acre, the Federal budget would increase $77 million per year for every 1 million CRP acres that are added to the program. So, if the maximum CRP acreage were increased to 30 million acres, it could potentially add $462 million per year to the Federal budget for CRP rental payments, which would be an increase of nearly 30 percent above the current level. Given the strong public support, as well as support by key members of the U.S. House and Senate Ag Committees, an increase in the maximum CRP acreage to 28-30 million acres in the next Farm Bill seems fairly likely to occur. If no new money is added to the spending targets for the next Farm Bill, there would have to be adjustments made in proposed Federal spending in the next Farm Bill to allow for some increase in CRP acreage. These budget adjustments could include lowering them maximum level of CRP rental payments in future sign-up periods, as well as reducing projected budget outlays for commodity programs, crop insurance, food and nutrition, and other Farm Bill programs. For more information on the current CRP enrollment, expiring CRP acres, rental rates, etc., refer to the USDA CRP web site: http://www.fsa.usda. gov/crp

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

C. Sankey

MN Valley Business • JANUARY 2018 • 25

Minnesota Business Updates

■

afforded through Target’s branded cards. Then, the app will combine all the discounts into a bar code on a smartphone that is scanned at checkout. Target says using the mobile payment system in its app, called “Wallet,” is up to four times faster than using other payment options.

■ WI markets to MN workers Wisconsin Republican Gov. Scott Walker wants to launch a nearly $7 million national marketing campaign to persuade millennials and military veterans in Minnesota and other states to move to his state to help with a worker shortage. He said the marketing campaign would pitch Wisconsin as a more affordable place for millennials to live where they could be spending more time in a canoe, having a drink with friends or attending a concert, rather than sitting in traffic, according to TwinCities. com. The effort would include $3.5 million in ads targeting military veterans and their families and $3 million marketing Wisconsin as a destination for young professionals, particularly those already living in nearby Midwest cities of Detroit, Minneapolis and Chicago.

■ CHS closes plants CHS has closed its Eagan Technology Center, as well as soy plants in Creston, Iowa and Hutchinson, Kansas. The company is moving out of the soybean protein production business. Spokeswoman Annette Degnan says a total of 144 employees at the three locations will be affected. The company reported net income of $127.9 million for the fiscal year ended Aug. 31, compared to net income of $424.2 million for fiscal 2016. CHS Inc. is a global agribusiness owned by farmers, ranchers and cooperatives.

■ Target has wallet app

■ Best Buy profits up

While it still does not accept Apple Pay or other thirdparty mobile payment options in its stores, Minneapolisbased Target is going the route of Walmart and others who have devised their own mobile wallets inside their smartphone apps. Target rolled out the feature to holders of its Redcard credit and debit cards. Users can combine their Cartwheel deals, weekly ad deals, as well as the 5 percent discount

Best Buy Co. released third quarter earnings showing its bottom line totaled $237 million, or 78 cents per share. This was up from $193 million, or $0.60 per share, in last year’s third quarter. Analysts had expected the company to earn 78 cents per share, according figures compiled by Thomson Reuters. Analysts’ estimates typically exclude special

Employment/Unemployment Initial unemployment claims Nine-county Mankato region Major October Industry 2016 2017 Construction Manufacturing Retail Services Total*

141 130 43 158 472

Local non-farm jobs Percent change ‘16-’17

163 136 30 130 459

2800

+15.6% +4.6% -30% -17.7% -2.7%

122000

Construction 122000 122000 Manufacturing Retail 111000 Services 111000 Total*

3,863 2,047 945 3,782 10,637

3,463 1,592 814 3,388 9,257

2100 1400

111000

700 100000

Minnesota initial unemployment claims October 2016 2017

3500

133000

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.

Major Industry 133000 133000

- 2016 - 2017 132,055 127,328

Nine-county Mankato region

Minnesota Local non-farm jobs (in thousands)

Percent change ‘16-’17

8000 3500 3500 6000 2800 2800 4000 2100 2100

-10.4% -22.2% -14.0% -10.4% -13.0%

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

26 • JANUARY 2018 • MN Valley Business

- 2016 - 2017 2,986 2,879

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

items. The company said revenue for the quarter rose 4.1 percent to $9.32 billion. This was up from $8.95 billion last year.

over a 10- to 20-year period, according to Commerce & Finance. As the statewide PACE administrator, the Port Authority has joint-powers agreements with more than 50 counties and 20 cites, allowing property owners in those jurisdictions to pay for energy-efficiency improvements through MinnPACE. More than 80 percent of state residents live in counties with PACE, according to Pete Klein, Port Authority vice president of finance.

■ 3M sues over patent 3M Co. has sued Kerr Corp., claiming that two of Kerr’s dental-composite materials infringe on 3M’s patent rights. 3M’s lawsuit alleges that Kerr’s SonicFill 2 and Harmonize dental-composite materials copy the patented nanotechnology 3M developed for its 3M Filtek Supreme universal dental restoratives, the Star Tribune said. 3M officials said 3M’s Filtek dental materials have been used in 600 million tooth restorations and are known for realistic aesthetics, strength and resistance to wear. The SonicFill 2 product has been marketed at least since 2015 as a way for dentists to fill cavities in molars with a single application. 3M has filed a number of claims against competitors alleging infringement.

■ State launches ‘Snapshot’ 133000

■ MinnPACE popular

133000 MinnPACE, a program providing private loans 133000

3500

administered by the St. Paul Port Authority, is showing 2800 popularity across the state. 122000 122000 PACE, which stands for “property accessed clean 2100 energy,” allows building owners to pay for energy111000 efficiency improvements through their property-tax bills 1400 111000

700

100000

100000 J F

J M

M J

J A

J S

Local number of unemployed

4000 2100 1400 2000

A O

S N

O D

8000 6000

3,970

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

95,510

72,447

100000 50000 D

F M A M AJ FA M

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

October

100000

0 F

J M

F M A A M J

M J

J A

2016

2017

2.7% 59,233 1,630

1.8% 60,758 1,145

J S

A O

S N

O D

Unemployment rates Counties, state, nation County/area

- 2016 - 2017

200000 150000

0 0 J F JM

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

100000

2000 0 F F

50000

Mankato/North Mankato Metropolitan statistical area

150000

2,910

4000

700 0 J 0 J

D 0

200000

Minnesota number of unemployed

- 2016 - 2017

Nine-county Mankato region 8000 3500 6000 2800

2000

Employment/Unemployment

F M A A M J

3500

Secretary of State Steve Simon announced the launch 2800 of the Minnesota Business Snapshot, a new initiative to 122000 the public data and information on the economic provide 2100 and demographic make-up of Minnesota’s businesses. It started with a voluntary, five-question survey being 1400 111000 to nearly 550,000 new and existing businesses offered 700 in Minnesota. The survey asks Minnesota business owners a variety 100000 0 J Fincluding M A how M Jmany J full A time S Oemployees N D J of questions, they have; whether they self-identify as a member of a specific community, such as a veteran, woman, or community of color; the industry or field in which the business operates; whether it’s a full-time or part-time 3500 endeavor; and gross revenues for the past year. 8000 200000 “The Minnesota Business Snapshot is going to make it 2800 easier and more convenient for small business owners to 150000 6000 identify 2100 potential partners, for consumers to target their spending, and for the public and educational institutions 4000 100000 to 1400 better understand the economic and demographic makeup 700 of our state’s business community,” said Simon.

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

October 2016

October 2017

2.8% 3.3% 3.9% 3.5% 3.5% 2.5% 3.3% 3.7% 5.0% 2.3% 3.4% 4.7%

1.9% 2.0% 2.6% 2.6% 2.6% 1.7% 2.1% 2.4% 2.9% 2.3% 2.4% 3.9%

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

initial unemployment MNMinnesota Valley Business • JANUARY 2018 claims • 27

Sponsored by the Carl & Verna Schmidt Foundation

As interest rates rise, banks paying more for deposits By Ken Sweet | AP Business Writer

lowly, but surely, being a saver is paying off again. For years after the recession, banks paid next to nothing on deposits — much to the detriment of savers everywhere. Now, banks have increased lending and need more deposits, so they’re willing to pay higher interest rates. The big publicly traded banks are paying roughly 0.40 percent on their deposits right now, which is up from 0.24 percent two years ago, according to a report from Autonomous Research after the major banks reported their quarterly results. A one year CD is now paying an average of 0.63 percent, which is up from 0.45 percent two years ago. That’s according to depositaccounts.com, a website that tracks interest rates on savings accounts and CDs. An interest rate of 0.40 percent or 0.63 percent may not sound like much, but analysts expect that banks will continue to increase payouts on deposits as competition ramps up. “We have been waiting for this to happen for a while now,” said Mark Hamrick, senior economy analyst at BankRate.com. During the financial crisis, the Federal Reserve lowered its benchmark interest rate to near zero, and kept it that way until December 2015. While the Fed’s move made the cost of borrowing substantially cheaper nationwide, it had a secondary effect of cutting the interest rate banks were paying on deposits. In particular, seniors got hit hard since they tend to keep their money in low risk products like money markets, CDs and cash. The Fed’s main interest rate is now 1.25 percent, and is expected to be raised to 1.5 percent at the Fed’s December meeting. As the Fed raised rates, banks initially were happy to charge borrowers higher rates while keeping the amount of interest they were paying on savings accounts and CDs low.

28 • JANUARY 2018 • MN Valley Business

Banks take on deposits in order to turn around and lend that money out. The goal for a bank is to make more money on the interest on its loans than the interest rate they are paying to fund those loans. The more demand there is for loans, which typically happens in a steadily growing economy, the more deposits a bank needs. For years after the financial crisis, loan growth was tepid as banks throttled back on lending, the U.S. consumer deleveraged and businesses pulled back on borrowing as well. Bank executives said they had little need for deposits. But nearly a decade after the crisis, loans of all types — with the exception of residential mortgages — are now at record-high levels. And the growing demand for loans requires banks to gather up deposits to fuel their lending business. The online-only banks, which typically pay the most for deposits, are paying even more these days. Goldman Sachs’ online bank GS Bank pays an interest rate of 1.29 percent on its savings account, with no minimum deposit. For those able to lock up their savings for a longer period of time, GS Bank is paying 2.37 percent for a five-year CD, with a minimum $500 deposit. Ally Bank is paying 1.25 percent for deposits to its online savings account. So is American Express, through its Personal Savings account. The largest of the banks are still being stingy, however, because their size means they don’t need to compete as aggressively for deposits. JPMorgan Chase is paying only 0.04 percent on a standard savings account, Bank of America is paying 0.03 percent and Wells Fargo, apparently with zero need for deposits, is paying 0.01 percent on a basic savings account. All three banks have CDs with slightly higher rates, but savers looking to maximize the interest they’ll earn on parking their money should shop around.

Sponsored by the Carl & Verna Schmidt Foundation

It was another strong year for homebuilder stocks

t was another strong year for investors who own homebuilding stocks. Shares of the 10 builders with the most completed sales are up an average of 60.8 percent. And exchangetraded funds, or ETFs, that invest in homebuilders have also notched gains that eclipse the growth in the broader U.S. stock market. While many economists expect U.S. housing market growth trends to continue next year, homebuilders that focus on entry-level buyers could be the safest bet for further gains. “The demand, as we see it, is likely to continue to be pretty good, but the builders that will most benefit will be those who have a focus on the low-end homebuyer,” said BTIG homebuilding analyst Carl Reichardt. A growing economy, solid job market, low unemployment rate and low mortgage interest rates have helped drive demand for homeownership this year. And a stubbornly thin inventory of homes for sale has kept home prices headed higher. All that has been a boon for homebuilders. Sales of new U.S. homes hit the fastest pace in a decade last month. The trends have also driven gains for some ETFs with exposure to homebuilders. The SPDR S& P Homebuilders ETF is up 27 percent this year, while the iShares U.S. Home Construction ETF is up 54.9 percent. Many economists expect the economic and housing market trends to continue next year, including further increases in sales of new homes and prices. “The market for new homes is improving steadily,” said Patrick Newport, executive director of U.S. economics at IHS Markit. “The prognosis going forward is for further steady growth over the next two years.” Realtor.com’s 2018 U.S. housing forecast released this week calls for U.S. home prices to rise 3.2

percent in 2018, down from a projected gain of 5.5 percent this year, as the inventory of homes for sale begins to rise. The forecast also sees sales climbing 2.5 percent. Most of the builders that were in business during the last housing boom have yet to see their share prices return to those high-flying levels. For now, Reichardt has “Buy” ratings on only two builders, D.R. Horton and Lennar. Earlier this year, D.R. Horton acquired land developerForestar Group in a deal that helps beef up the builder’s access to land that’s been cleared for new construction. Last month, Lennar bought rival CalAtlantic Group in a $5.7 billion deal, not including $3.6 billion in debt that will create the nation’s largest homebuilder. “Those are two companies undergoing transformations to some degree that we think can result in higher long-term multiples,” Reichardt said. “It’s harder to make that argument for many of the other companies in the group at these valuations right now.” Another reason Reichardt is bullish on D.R. Horton and Lennar: Both are catering to entry-level buyers, which he believes have more potential to make solid gains at this stage in the housing recovery. Through much of the housing rebound that began around 2012, many homebuilders primarily sought to cater to homeowners looking to trade up to bigger or nicer homes, which were typically pricier and translated into better margins for builders. Those buyers were also generally in a better financial position to put down a big down payment or qualify for financing. MV

MN Valley Business • JANUARY 2018 • 29

On November 14, more than 500 members of the Greater Mankato community gathered to honor some of our region’s most outstanding businesses, organizations and professionals at the Greater Mankato Business Awards & Hall of Fame. Thank you to our members, the emcees and all the attendees for a memorable event. Please join us in congratulating all of this year’s award recipients! To view pictures and video from the event, as well as nominate a business, organization or professional for 2018, please go to: greatermankato.com/hall-fame. Presenting Sponsor:

Event Sponsor:

Video Sponsor:

GREATER MANKATO GROWTH AWARDS

Greater Mankato Growth

HALL OF FAME Kato Insurance Agency

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

30 • JANUARY 2018 • MN Valley Business

GREATER MANKATO GROWTH AWARDS YOUNG PROFESSIONAL OF THE YEAR Christopher Harstad

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

BRIAN FAZIO BUSINESS EDUCATION PARTNERSHIP AWARD Junior Achievement of Greater Mankato; Mankato Area Public Schools; Loyola High School

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

DISTINGUISHED BUSINESS AWARD Chankaska Creek Ranch & Winery

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

MN Valley Business • JANUARY 2018 • 31

Greater Mankato Growth

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

HAP HALLIGAN LEADERSHIP AWARD John Bulcock

CITY CENTER PARTNERSHIP CITYDESIGN AWARDS

Greater Mankato Growth

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

NEW CONSTRUCTION OVER $5,000,000 Block 518 (Tailwind Group)

RENOVATION $500,000 - $1,000,000 Bluebird Cakery

RENOVATION UNDER $500,000 Center for Innovation and Entrepreneurship

PRESERVATION STEWARDSHIP “Boy in Blue” Monument

DOWNTOWN DETAIL “Kites” Mural (City of Mankato)

32 • JANUARY 2018 • MN Valley Business

CREATIVE PLACEMAKING Human Foosball (Greater Mankato United Way)

CITY CENTER PARTNERSHIP AWARDS CITYART “PEOPLE’S CHOICE” AWARD “Maestro” by Sherri Treeby & Lee Leuning

The Maestro depicts a time pre-internet when kids would use their imaginations in their play, where there were no limits or boundaries. He is a little boy dressed up in an adult bowtie and tux, still in his tennis shoes and t-shirt, and using a stick as a baton. He stands on a milk stool, most likely he is on a farm, and conducts his imaginary orchestra. His orchestra consists of working, melodic chimes and xylophone, and he invites viewers to join in and make music!

VISIT MANKATO AWARDS HOSPITALITY AWARD Mankato RibFest

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

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

MN Valley Business • JANUARY 2018 • 33

Greater Mankato Growth

BRING IT HOME AWARD Paul Gaspar, Mankato United Soccer Club

Greater Mankato Growth 34 • JANUARY 2018 • MN Valley Business

MORE OPPORTUNITIES Opportunity comes packaged in accessible, quality-oflife ways in Mankato: dazzling arts and entertainment, year-round recreation, great outdoors, top-notch schools and promising career paths. It’s where “you” time outstrips drive time. In Mankato, opportunity not only lives – it knocks.

O P P O R TUN I TY. L I V E S . HE R E .

moremankato.com photo credit quality1hrfoto.com

n November 15th, Greater Mankato Growth, Inc., numerous partners and local vendors were proud to launch moremankato.com. Geared mainly towards talent attraction and retention, this go-to hub is a game-changing website that has the added benefit of promoting this region in a new and immersive way. Take the 360° virtual tours today!

MORE ARTISTRY Take in the CityArt Walking Sculpture Tour, visit art galleries, the children’s museum, the ballet, a riverfront concert or the Mankato Symphony Orchestra; enjoy acoustic guitar at a local coffeehouse. Mankato’s cultural scene provides an inspired quality of life. In Mankato, opportunity not only lives – it inspires.

MORE GROWTH

MORE FUN Drop a canoe to paddle through a scenic river valley, hit the slopes or bike miles of paved trails. Yearround activities abound, from swimming to skating, snowshoeing to waterskiing, walking to marathon running; collegiate hockey to amateur baseball. In Mankato, opportunity not only lives – it entertains.

MN Valley Business • JANUARY 2018 • 35

Greater Mankato Growth

As the youngest, fastest-growing regional urban center in Minnesota, Mankato is a market on the move. As a hub for health care, education, retail, agriculture and industry, with employers offering competitive career opportunities, Mankato simply offers more. In Mankato, opportunity not only lives – it enriches.

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MN Valley Business • JANUARY 2018 • 37

HAND OR WRIST ISSUES?

Don’t let arthritis, carpal tunnel or a fracture limit your potential. Regain functionality in your hand or wrist by visiting our orthopedic experts in Mankato.

Mayo Clinic Health System in Mankato Call 1-877-412-7575 to schedule an appointment. mayoclinichealthsystem.org

MN Valley Business • JANUARY 2018 • 38