Mnvalleyaugust2015 by Free Press Media

Randy Farrow, CEO of Mankato Clinic. Photo by John Cross

Better care, better results

Mayo, Mankato Clinic focus on health outcomes

Also in this issue • The comfort food of Garden of Eat’n • Vineyards a growing ag business • The History Writers

The Free Press MEDIA

The Orthopaedic & Fracture Clinic and River’s Edge Hospital-St Peter have partnered to offer

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F E A T U R E S August 2015 • Volume 7, Issue 11

For years, Mayo Clinic Health System in Mankato and the Mankato Clinic have been on a methodic march to improve health outcomes and deliver care more cost-efficiently.

Ray Winter of rural Janesville was one of the early pioneers of the area vineyard business, but now many others, including Dave and Carol Reedstrom grow grapes.

Karen Ballman and her son Tony opened the Garden of Eat’n on Commerce Drive in upper North Mankato and they bring a wealth of experience to offering great food.

Brian and Deborah Fors love history and for many years had a dream of opening their own business, something they did recently by launching The History Writers.

MN Valley Business • august 2015 • 5

■ August 2015 • VOLUME 7, ISSUE 11 PUBLISHER John Elchert EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Pete Steiner Heidi Sampson Nell Musolf Tim Penny PHOTOGRAPHERS Pat Christman John Cross COVER PHOTO John Cross PAGE DESIGNER Christina Sankey ADVERTISING Ginny Bergerson MANAGER ADVERTISING sales Jen Wanderscheid Theresa Haefner ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Denise Zernechel DIRECTOR For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6336, or e-mail mankatomag@mankatofreepress.com. MN Valley Business is published by The Free Press Media monthly at 418 South 2nd Street., Mankato MN 56001.

■ Local Business memos/ Company news................................7 ■ Business and Industry trends.........9 ■ Minnesota Business updates....... 10 ■ Business Commentary................. 12 ■ Construction, real estate trends.. 33 ■ Agriculture Outlook...................... 34 ■ Agribusiness trends..................... 35 ■ Job trends..................................... 36 ■ Retail trends................................. 37 ■ Greater Mankato Growth.............. 38 ■ Greater Mankato Growth Member Activities ....................... 40

From the editor

By Joe Spear

Prescribing good health care

hen I hear political leaders saying we’ve not “bent the cost curve on health care,” or there is no reform in care delivery, I wonder if they’ve ever stopped into a health-care facility in a place like Mankato. Reform is all around. We’re bending the cost curve in Mankato and in Minnesota. Over cover story this month and our annual review in Minnesota Valley Business of the local health care industry always enlightens. We know electronic health-care records were mandated by government programs, but the Mayo Clinic Health System in Mankato and the Mankato Clinic have had electronic records up and running well for some time. Patients can access their health care records from their home computer, whether it’s the result of a blood test or a note from your doctor. Patients can also ask questions and communicate information to their health care provider without having to make a doctor appointment every time. Mankato Clinic has almost 20,000 patients enrolled. A few short years ago, people were saying electronic health-care records would not be feasible because everyone had a different computer system. Things are changing. Mankato Clinic also has set up health-care teams for chronic and serious cases where a patient might have a number of health issues. There’s a case coordinator who is checking on the patient periodically, making sure they’re taking their medicine. The clinic has appointed six registered nurses just to help coordinate complex cases. There are even social workers who consider a patient’s living situation or housing needs, understanding that a problem with a living situation can adversely affect the health care of a patient. Mankato Clinic CEO Randy Farrow talks about a 17-year-old patient who before team care, had been in and out of the hospital frequently. With a managed case and visits to adjust medicine, the patient hasn’t been in the hospital at all. That’s bending the cost

6 • August 2015 • MN Valley Business

curve. Technology allows the clinic to monitor patient blood sugar, weight and other indicators while they are at home. If something looks like it’s going bad, they can intervene to stop it from getting worse and get it under control. Most of the reform is preventive. It works to prevent bad things from happening, and to prevent huge costs from being incurred without reason. It also is driven by mandates from the government and insurance companies to pay based on health outcomes versus how many times a person sees a doctor. Mankato Clinic also has made investments in employee engagement and customer feedback. It helps them work together on the goal of providing good care, but also listening to health consumers on what works for patients. Mayo Clinic points to the increased role of evaluation. The state and other groups are now collecting data routinely on hospital and clinic outcomes. The ratings are publicized and push the organizations to do better. Mayo Clinic has an in-patient mortality rate that had declined to a point where it’s twice as good as the state average, says CEO Greg Kutcher. In heart care, Mayo has a heart attack treatment rate that is at 50 minutes, beating by far the gold standard of 90 minutes. It’s clear the local clinics are investing millions of dollars to address the cost issue, to bend the cost curve, to have better outcomes and more patient satisfaction. As the business model changes, both of the major health care organizations in Mankato seem to be rolling with the changes and adapting well, maybe better than most places. MV Joe Spear is executive editor of Minnesota Valley Business. Contact him at jspear@mankatofreepress.com or 344-6382. Follow him on Twitter @jfspear.

Sterling House now Brookdale

Sterling House of Mankato, a senior living community, has changed its name to Brookdale Mankato. It reflects its connection to the Brookdale senior living group and the network of services it provides for senior adults.

Clause joins Commerce Dental

Commerce Drive Dental Group has added Garrett Clause as an associate dentist. Clause is a Mankato native and graduate of Mankato East High School and Gustavus Adolphus College. He graduated in May 2015 from the University of Minnesota School of Dentistry.

■■■

Nelson honored by Taco John’s

Sarah Nelson, manager and franchisee of the Mankato Taco John’s, has been named the winner of the Have Fun Award, by the national Taco John’s. Taco John’s has nearly 400 locations. “Sarah and her crew members have produced music videos and held competitions within the restaurant to help improve guest’s experience and engagement of the crew,” says Jeff Linville, CEO for Taco John’s.

Garrett Clause

To submit your company or employee news. e-mail to tkrohn@mankatofreepress.com Put “Business memo” in the subject line. Call or e-mail Associate Editor Tim Krohn at tkrohn@ mankatofreepress.com or 344-6383 for questions.

8 • August 2015 • MN Valley Business

■

Business and Industry Trends

Economy

GDP slips some

The Bureau of Economic Analysis reported that real GDP decreased at an annual rate of 0.2 percent in the first quarter of 2015, above the previous estimate of a 0.7 percent decrease. With this estimate for the first quarter, exports decreased less than previously estimated and personal consumption expenditures and imports increased more. Forecast real GDP growth is 2 percent in 2015 and rises to 2.8 percent in 2016.

Disposable income grows

Real disposable income is projected to grow by 3.5 percent in 2015. Total industrial production should grow at 1.7 percent in 2015 and 3.4 percent in 2016. Projected growth in nonfarm employment averages 2 percent in 2015 and 1.4 percent in 2016.

Expenditures up

Forecast private real fixed investment growth averages 4.4 percent and 7.6 percent in 2015 and 2016, respectively, led by equipment in 2015 and 2016 and by equipment and structures in 2016. Real consumption expenditures grow faster than real GDP in 2015, at 2.8 percent, and below real GDP in 2016 at 2.7 percent. Durable goods expenditures drive consumption spending in both years.

Exports, imports to grow

Export growth is projected at 1.6 percent and 4.9 percent over the same two years, while import growth is 5.4 percent in 2015 and 5.8 percent in 2016. Total government expenditures rise 0.8 percent in 2015 and 0.7 percent in 2016.

Energy

Crude prices down

North Sea Brent crude oil prices averaged $61/barrel in June, a $3 decrease from May. Crude oil prices fell by about $4 a barrel on July 6 in the aftermath of the “no” vote in Greece on the economic program, as well as lingering concerns about lower economic growth in China, higher oil exports from Iran, and continuing growth in global petroleum and other liquids inventories, according to the Energy Information Administration. A percent price change of this extent on a single day is unusual, but despite daily price volatility, monthly Brent crude oil prices have averaged between $55 and $65 per month since falling to $48 in January. Brent crude oil prices should average $60 per barrel in 2015 and $67 in 2016. Forecast West Texas Intermediate crude oil prices in both 2015 and 2016 average $5 less than the Brent price.

prices should average $2.48 for all of 2015.

Crude production declines

U.S. crude oil production declined by 50,000 barrels per day in May compared with April. Production is expected to generally continue falling through early 2016 before growth resumes. Projected U.S. crude oil production averages 9.5 million barrels per day in 2015 and 9.3 million in 2016.

Natural gas inventories up

Natural gas working inventories were 2,577 billion cubic feet on June 26, which was 35 percent higher than a year earlier and 1 percent higher than the previous five-year average. Although injections have been strong most weeks, hot temperatures and high demand from the electric power sector contributed to lower-than-average injections during late June. Nevertheless, working inventories are on pace to end the injection season above the previous five-year average.

Fuel use rises

Total U.S. liquid fuels consumption rose by an estimated 70,000 barrels per day (0.4 percent) in 2014. Total liquid fuels consumption is forecast to grow by 400,000 barrels a day (2.1 percent) in 2015 and by 120,000 barrels per day (0.6 percent) in 2016.

Electricity resources good

The North American Electric Reliability Corporation indicates that there are adequate resources available this summer to meet projected peak electricity demand levels. Even in areas of the United States that have experienced constraints in certain power generation supplies, reliability of the bulk power system should not be a concern this summer. California’s drought has significantly lowered available hydroelectric resources within the state, but the California Independent System Operator has determined that recent additions of renewable generation capacity and increased imports of electricity from the Pacific Northwest should be enough to cover peak power demand this year, even under an extreme scenario of high electricity consumption and possible generator outages.

Electric use to rise

The typical U.S. residential electricity customer will use an average of 1,044 kilowatthours per month this summer (June, July, and August). This level of consumption would be 3.7 percent higher than the same period last year. The increase is driven primarily by an expected 13 percent increase in summer cooling degree days. For the year, EIA expects U.S. retail sales of electricity to the residential sector during 2015 to grow by 0.3 percent from 2014 levels.

Gas prices to slide

EIA expects monthly average gasoline prices to decline gradually from their June level to an average of $2.49 during the second half of 2015. Regular gasoline retail

MN Valley Business • august 2015 • 9

Minnesota Business Updates

■

■ Medtronics buys surgical co. In one out of an estimated 7,000 operations, the surgical team leaves something behind — a sponge, towel or gauze, for example. Now Medtronic is buying a company whose products can help find those items. California-based RF Surgical Systems embeds surgical materials with low-radio frequency tags that can be detected by passing a wand over a patient, according to Minnesota Public Radio. Left in place, such items may cause serious and lifethreatening problems. They may also require additional x-rays and corrective surgery. Medtronic spokesman John Jordan said the system provides an additional safeguard beyond a nurse counting the items used in an operation. Medtronic is acquiring the company for $235 million.

■ U.S. Bank profits fall U.S. Bancorp, the parent company of U.S. Bank, said its second-quarter profit fell slightly from a year ago. Net income was $1.483 billion compared with $1.495 billion in the second quarter of 2014. The latest profit amounted to 80 cents a share, in line with analysts’ expectations. Little has changed over the past 12 months for the Minneapolis-based bank company. Both revenue and expenses declined slightly. The company’s net interest margin was 3.03 percent, down from 3.27 percent a year ago. “We must continue to balance the investments we make in our highest return initiatives with prudent financial discipline – that’s the nature of navigating through this low interest rate environment,” chief executive Richard Davis said in a statement. Bank earnings have been mixed. Wells Fargo reported a slight decline in second quarter profit compared to a year earlier. Bank of America said its profits doubled.

■ House wants GMO label ban The U.S. House Agriculture Committee pushed a ban on mandatory labeling of genetically modified foods a step closer to law. With Minnesota Democratic Reps. Collin Peterson and Tim Walz supporting and Rick Nolan opposing, the committee sent to the House floor a bill to prohibit states from forcing food companies to note the presence of genetically modified organisms — GMOs — in their products, according to the Star Tribune. The bill represents a major victory for the food and chemical industries, which fought and failed in court to stop mandatory GMO labeling. Individually and through trade associations, big Minnesota food companies such as Land O’Lakes, Cargill, Hormel and General Mills supported the bill that the agriculture committee approved. If passed by the House and Senate and signed into law by the president, the bill will do what the courts have refused to do: Stop Vermont from implementing a

10 • August 2015 • MN Valley Business

mandatory GMO labeling law next year. Maine and Connecticut also have passed GMO labeling laws that would be thwarted. The Republican-run House is expected to easily pass the labeling bill. Prospects in the GOP-run Senate remain uncertain because of differences in how debate is conducted and mushy Democratic support.

■ Johnson may sell watercraft business Johnson Outdoors, the provider of outdoor recreation equipment, could divest its watercraft business if it is not successful in turning around the unit. The company’s plans for the unit were revealed during an interview following a company presentation given by CFO David Johnson. John said during the presentation that the company’s goal is for the watercraft business to be profitable in 2015, though he conceded afterward that the unit is currently still in turnaround mode. For its most recent fiscal year, ended Sept. 27, the watercraft business generated nearly $51 million in revenue, compared to about $58 million for the same period a year prior, and had an operating loss of roughly $2.1 million, compared to a loss of about $400,000 for the previous fiscal year. And, while Johnson Outdoor’s tent business has also struggled - the division is mostly the Eureka brand Johnson called it a great “beachhead,” for the company’s other products, and so was unlikely to be divested. The company’s other products include marine electronics, including radar devices that help fishers detect fish, diving equipment, and camping equipment. In the meantime, Johnson Outdoors is also interested in acquisitions, and would be interested in buying businesses with performance or technology aspects. John said a company such as Osprey Packs Inc., a maker of outdoor gear, would be an attractive target.

■ Could Target sell grocery business? Target is in the midst of a major transformation amid its exit from the Canadian market. Earlier this year, the company unveiled increased costcutting plans, including thousands of employee layoffs. The big-box retailer’s latest move to streamline its business came last month, when Target announced that it was selling its network of in-store pharmacies and clinics to CVS. The $1.9 billion deal is unique in the sense that it puts two would-be competitors, CVS Health and Target Corporation, on the same team, according to Motley Fool. Could Target’s grocery and food business be destined for a similar fate? Target got into the grocery business in 1995. In 2008, the bull’s-eye brand rolled out its expanded food format known as PFresh after successfully testing the fresh-food and consumer packaged-goods layout in two of its Minnesota stores. Target now has a full grocery assortment

at the vast majority of its stores. Food and pet supplies is one of Target’s fastest-growing business segments today, accounting for 21 percent of Target’s fiscal 2014 revenue. However, groceries and food carry notoriously low margins. In fact, the average grocer probably gets a 2-3 percent operating margin. It’s hardly surprising, then, that Target’s grocery business doesn’t significantly contribute to the company’s bottom line. Rather, the big-box store’s decision to expand into the grocery business was an attempt to position its brand as a one-stopshop. You see, Target’s PFresh offerings help attract more consumers to Target locations on a regular basis, similar to the pharmacies that it recently sold to CVS. Therefore, if the retailer were to find a grocery chain to rebrand and operate Target’s food business, it would be ridding itself of a business that’s not earning much profit, while continuing to benefit from the added in-store traffic that offering food and fresh produce affords.

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MN Valley Business • august 2015 • 11

■

Business Commentary

By Tim Penny

Celebrating Diversity: Not your grandparents’ Greater Minnesota”

innesota is often split into two regions - metro and rural - especially when talking state politics. Historically, this dichotomy took on the subtext of business versus agriculture and mining. However, since the farm crisis of the 1980s, Greater Minnesota realized the importance of diversifying beyond agriculture as the mainstay of our economy. These efforts are paying off. “It’s not your grandparents’ Greater Minnesota anymore,” writes Joyce Hoelting of University of Minnesota Extension in an overview of a report on the economic composition of Minnesota’s 80 non-metro counties. “Economically, there are many Greater Minnesotas, and the diversity of Greater Minnesota is its strength,” says Brigid Tuck, Senior Economic Impact Analyst at the Center for Community Vitality. Even within Southern Minnesota Initiative Foundation’s (SMIF) 20-county region there is a broad range of entrepreneurial efforts, from manufacturing to creative placemaking, tech startups to a reimagining of what agriculture looks like. As we move further into the 21st century, it’s becoming increasingly important for our non-metro regions to build on these enterprising efforts. Part of this effort involves recognizing the diversity of people and places that already exists. To this end, in July, SMIF staff, Board, and other stakeholders are embarking on a “regional road trip.” We’ll take a bus tour of the four western-most counties of our region: Brown, Faribault, Martin, and Watonwan. We’ll see how our investments are taking root in cities like Blue Earth and Fairmont, where companies such as Simplified Ag Technology and Visions are manufacturing new farm equipment components and creating jobs. To further the storytelling of how Greater Minnesota is increasingly more than an agricultural and mining hub, The McKnight Foundation has commissioned Jay Walljasper to do a four-part series on the non-metro regions. The first, Small Towns, Big Ideas: Reimagining Southeast Minnesota, takes a look at the eastern part of SMIF’s region. Walljasper points to several of SMIF’s loan and grant recipients as examples of innovation in the region: the diversification of agriculture and growth in local foods, noting Main Street Project’s “agripreneur program” focused on increasing the capacity of immigrant farmers and the success of Feast! Local Food Network; Red Wing’s Innovation Incubator, created to nurture entrepreneurs; small communities focusing on arts as an economic development tool, such as Lanesboro; and manufacturing companies exploring alternative uses for agricultural products, like Bio-Plastics LLC in Blooming Prairie. In addition to supporting projects like the above, SMIF

12 • August 2015 • MN Valley Business

SMIF’s three new Board members, from left: Cindy Scheid, principal at CliftonLarsonAllen; Adenuga (Nuga) Atewolugun, president of Riverland Community College; Sue Harris, Community Education Director at St. James Public Schools. is playing an active role in other conversations around regional diversity. In July, we’re partnering with several Rochester-area businesses and organizations to explore how increasing supplier diversity of corporations like Mayo and Hormel is a smart double-bottom line strategy. We’re continuing to support projects that emerged from our Regional Community Growth Initiative grant that will expand the benefits of Rochester’s Destination Medical Center in the surrounding communities. In all of these efforts to diversify our local economies, we rely on our Board of Directors to help us meet the varying needs of our region. In June, we welcomed three new Board members and say good-bye to two. This is an annual process which allows us to benefit from a broad range of talent and viewpoints as we shape our policies and long-term plan. Our now 15-person Board represents 15 counties, as well as a broad range of industry sectors, including early childhood, education, healthcare, finance, law, and business. Their varied perspectives make for rich - and often challenging - discussions. These debates and challenges are necessary as we move forward. They come from a shared interest to help our communities prosper. We believe that supporting a diversity of people and economic opportunities strengthens not only Greater Minnesota, but our state as a whole. As Tuck says, after examining their research: “Every industry, and every part of the state, is going to have booms and busts. That’s why our diversity is our strength.” MV Tim Penny is president of the Southern Minnesota Initiative Foundation timp@smifoundation.org or 507-455-3215.

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MN Valley Business • august 2015 • 13

Randy Farrow, CEO of Mankato Clinic

Making patients better Team approach to care increasing By Tim Krohn | Photos by John Cross

14 • August 2015 • MN Valley Business

Children’s Health Center at Wickersham.

mid the national din over the Affordable Care Act and concerns about health care costs, local healthcare leaders say there has been a quiet but concerted effort to reform how care is delivered — and the payoff is now being seen. “The quality of care — the measurable outcomes — continue to improve,” said Dr. Greg Kutcher, president and CEO of Mayo Clinic Health System in Mankato. Mankato Clinic, too, has been on a years-long effort to improve health outcomes. “A focus for us in the past several years with health-care reform, is how we deliver care,” said Randy Farrow, CEO of Mankato Clinic The two major health-care providers in south central Minnesota have both continued to see growth — and pressures from that growth. Technological advances continue to drive change and bring better and more resources to providers and patients in the region, with everything from local responders at an accident scene being in contact with neurosurgery experts in Rochester to patients being able to look up their records and communicate with their providers at Mankato Clinic or Mayo.

friendly activities in the patient lobby, from books to an interactive floor. “It was a big project for us at $9 million. We’re very pleased with how it turned out and the comments from people have just been very positive,” Farrow said. “The whole thing is designed to make things as pleasant as possible for kids when they have to go to the doctor.” Pediatric Therapy Service, a Mankato organization, has offices at the children’s center and is geared toward physical therapy, speech and language therapy. Gillette Children’s also has staff and visiting staff at Wickersham and provides services beyond general pediatrics Mankato Clinic offers. “We want to make it a convenient one-stop so people don’t have to travel to the Twin Cities. Gillette has specialties like orthopedics, neurology, craniofacial surgery, neurosurgery, sleep medicine,” he said. “Children’s bodies are obviously different than adults. It’s gone better than we’d hoped.” Like Mayo, Mankato Clinic has been focusing on improving outcomes and the way care is delivered, as the health-care system begins to move away from fee-for service — in which providers are paid for the tests and procedures they deliver — to being paid for the quality of the outcome as based against industry standards. “We have three areas we’ve focused on — improving health outcomes, improving the experience of accessing care and how we can address the cost and create more cost-effective ways to deliver care.” One expanding program is the clinic’s Bluestone Vista program in which teams make regular visits to nursing and assisted living facilities. “We work with 24 facilities in the area and that continues to grow. The idea is to bring care on site. The team gets to know the patient, the family

Cover Story

Mankato Clinic

Mankato Clinic, one of the largest physician-owned clinics in Minnesota, has continued its growth. Several years ago they opened the Wickersham campus on the northeast edge of Mankato, a campus that includes clinical services and a surgery center that the clinic and Orthopaedic & Fracture Clinic operate. Last fall they opened a new 56,000 square-foot children’s health-care facility at Wickersham. It features 30 exam rooms and specialty care, thanks to a Mankato Clinic partnership with Gillette Children’s Specialty Healthcare and Pediatric Therapy Services, along with multiple kid-

MN Valley Business • august 2015 • 15

and the staff. It’s much better than the fragmented care of the past,” Farrow said. The clinic is also beefing up teams that provide more intensive ongoing care for patients with the most complex conditions. “We have six RNs on staff that just focus on the most complex cases, people with multiple issues and who can be in and out of the hospital a lot.” He said the teams share information on the care provided by different providers someone is seeing and check in with patients routinely, making sure they are coming in for checkups, monitoring the medications and monitoring their conditions. “Rather than the old system of just taking care of people when they’re sick and come in.” “We had a 17-year-old patient who signed up for our Care Coordination Program. We go to their house and adjust medications and things. This person had been in and out of the hospital frequently and last year we were able to avoid any hospitalizations for that person.” They are also turning to more technology to help patients, such as home monitoring for blood sugar, glucose, weight and other information. “If staff sees a bad change they can intervene and get things under control,” Farrow said. The clinic is also paying more attention to how social determinants affect a person’s underlying health. “Do they have financial issues, housing issues, transportation issues? Do they have family support? Those things can really impact people’s overall health and we’re working with understanding that better and working with public health and community organizations on how to coordinate care.” Part of that work includes the First Steps program in which providers work with pregnant women who might be at risk in their delivery because of their living situation. “We have a coordinator with a social services background who works with these young moms. It might be finding affordable housing or helping them sign up for Medical Assistance, helping them navigate all of that.” The clinic’s electronic “patient portal” system is another way to provide more ongoing contact with patients and staff. “We have almost 20,000 enrolled. It’s just a convenient way for people to access their information and they can communicate with their medical provider through the portal if something comes up,” Farrow said. “We’ve been making big investments in IT support and electronic systems and storage overall. Our need for electronic storage has just grown exponentially. We have Top: Dr. Katie Smentek (left) and LPN Terri Fitzsimmons talk at a shared work station over 100 servers just to store information and invested at the new Wickersham facility. Center: The children’s clinic is designed with bright $9 million since 2013.” colors and artwork. Bottom: Mankato Clinic has had to add lots of server space to Farrow said they’re also working to get more patient handle digital information. feedback. “We realized we were lacking a big voice at the table — the voice of our patients. Last year we and OFC work with Laurels Peak where patients can stay started a Patient Advisory Council and they helped a lot to recover after having hip replacements rather than with how we design our website and patient portal and staying in a hospital. influenced our hours of operation so we answer telephones While the focus is on patient outcomes, Farrow said the from 7 a.m. instead of 8 a.m. They don’t just tell us the clinic has also ensured they have an engaged workforce. positives and that’s what we want.” “It’s a big focus for our leadership team. We were very The clinic is also growing its partnerships, including proud to be recognized by the Star Tribune recently as one with New Ulm Medical Center, Rivers Edge Hospital and of the best places in Minnesota to work. That’s an ongoing Clinic in St. Peter, with Blue Earth and Madelia healththing, to have the best culture here for people to do their care facilities. They also have joint ventures with Advance best work.” Pain Management and DaVita dialysis services. And they

16 • August 2015 • MN Valley Business

The hospital at Mayo Clinic Health Systems in Mankato.

Mayo Clinic Health System

Mayo Clinic Health System, which has not only clinical operations but also its hospitals, emergency departments and helicopter service, has been approaching improved health outcomes on a multitude of levels. Kutcher said the hospital has been able to reduce its inpatient mortality rate considerably and is twice as good as the state average. “Our Emergency Department, Intensive Care, palliative care teams have all improved care.” He said the rates of screening for things like breast cancer, colon cancer and other screenings have also improved. Mayo is in the process of doubling its Emergency Department space at its Fairmont hospital. He said staffing smaller city ERs with board certified ER personnel can be difficult but Mayo is using many other trained staff that has integrated contact with board certified staff. “And now our ambulance crews, paramedics can do an EKG and they can go directly to where they need to take the patient,” Kutcher said. In the past, a possible heart attack victim would be brought to the ER for an EKG and then if needed sent to the cath lab to get a “balloon” inserted to open an artery. The “door to balloon” time is vital in saving heart muscle and lives. The gold standard is a 90 minute time frame. Mayo has a 50 minute time frame. “That’s definitely saved lives,” Kutcher said. Mayo has also upgraded its ability to examine sexual assault victims and provide the evidence that is needed to prosecute perpetrators. Often when a victim came in, a trained nurse wasn’t available and the victim had to travel to Shakopee to be examined — something traumatized victims sometimes didn’t want to do. “We now have enough trained staff 24/7 at all of our sites,” Kutcher said.

Kutcher said Mayo has long been focusing on “how we take care of patients from preventive care all the way to the most advanced care. All of these things, we’ve been working on for years. Our focus has been on letting people get the care they need when and where they want it.” He said a review of health data shows that a relatively small number of very complex cases consume an inordinate amount of health-care resources and costs. “Those are the people who need a team. We have doctors, mental health providers, pharmacists all coordinating care together,” Kutcher said. He said including a pharmacist on the team is very important because one of the big problems was patients with complex cases, who were being cared for by multiple providers, were getting drugs that had bad interactions or patients were not on the most effective drugs for all their needs. The palliative care approach to serious cases pays off with fewer hospitalizations, lower cost and higher patient satisfaction. “The team is better for the patients and it’s better for the system. We have the best palliative care for any region our size in the nation,” Kutcher said. Kutcher said other areas that have been growing in importance at Mayo include orthopedics, as an aging population requires more hip and knee replacements. And the neurosciences have grown dramatically. “Our spine unit combines everything from neuroscience to chiropractic.” He said the neuro staff in Rochester also has brought more resources via live, instant contact through technology. “Right now if there is a kid injured on the ski hill and a helicopter can’t get in, we can be in contact with Rochester and with trained neurosurgeons and staff here can provide a great outcome.”

MN Valley Business • august 2015 • 17

TOP Dr. Greg Kutcher, president and CEO of Mayo Clinic Health System in Mankato. Center Mayo Pediatric nurse Vickie Parsons checks a patient at Mayo Clinic in Mankato. Bottom Mayo R.N. Bethany Dierks (left) talks with a pediatrics patient. Finally, he said care for babies is patients. “But it’s not all bad, much improved. “Babies can be here either, because people are more much more often than in the past selective about elective care they when they had to be in Rochester. get. And people use ‘Dr. Google’ That’s much better for the family.” to get information.” Rochester-based Mayo Clinic has And Kutcher said that while spent more than $1 billion on a new the system is moving toward integrated records system. Kutcher outcome-based reimbursement, said that not only improves patient too much of the system is still access to their information and designed on a fee-for-services provider, but allows for an integrated system. “It’s getting better with link for local providers and patients paying for outcomes and good to all of the expertise in the worldresults, it’s slowly moving to payrenowned Mayo system. “People for-results.” don’t have to go to Rochester for a He said that while funding is a lot things. Getting the knowledge of challenge, Mayo delivers many Mayo Clinic doesn’t require that low-reimbursed services. “Things travel.” like in-house mental health, it Kutcher said the changing doesn’t pay well, it’s a hassle. But economics of health care continues if we don’t do it it’s going to be to be one of the biggest challenges. the problem of law enforcement “The business model is so different.” or someone else,” he said. He said the amount of unreimbursed “A lot of things we’re doing is care continues to grow as Medicare on our dime because we think it’s MV and Medicaid continue to pay less. the best thing to do.” “Fifteen or 20 years ago it was (paid at) 75 cents on the dollar and now it’s 45 cents.” He said more and more patients now have high deductible and high co-pay insurance policies, which causes more financial pain for 18 • August 2015 • MN Valley Business

Dave and Carol Reedstrom moved back to the family’s century farmstead near Rapidan and began planting a few grapes in 1996.

Fruits of the Vine Grape production increases

By Pete Steiner | Photos by John Cross

ay Winter had been doing his research. The lifelong Janesville area farmer knew you had to have the facts and figures to make a profit. For two years, he’d been going to meetings and seminars. At a time when prices were low for corn and soybeans, he wanted to know if a guy could make money with an alternative crop. He set aside one acre to grow wine grapes, which he began selling several years later to Morgan Creek Vineyards. Then, at 50, not quite a decade ago, he pulled the trigger, gave up combining hundreds of 20 • August 2015 • MN Valley Business

acres of corn and beans, and began expanding his vineyard to 15 acres. When daughter Angie expressed serious interest in winemaking, the Winters decided to begin producing and marketing their own wines. Today they sell nearly 50-thousand bottles a year.

Profile

•••• As Americans’ fondness for wine grows – a Uof M study in 2008 said we now drink more per capita than Italians

Red Jacket Vineyards near Rapidan has 600 grape vines. and are rapidly overtaking the French – wine production has increased dramatically in Minnesota. From just two wineries in the state in 1975, 40 years later, the Minnesota Grape Growers Association says, there are now nearly 50. And thanks to winter-hardy grape varieties developed by the University of Minnesota, much of the production comes from grapes grown in-state. Today, the greater Mankato area alone has three wineries that grow grapes and enthusiastically market their wines. A fourth has just opened south of town, although it’s currently mostly private and by appointment only, and a fifth winery may open soon near New Ulm. While it may seem a romantic notion to have your own vineyard, the first thing anyone involved will tell you is, it’s a lot of work, and it takes years to pay back the investment. Still, farmers continue to convert a small, but increasing number of acres to wine grapes. Purdue University Extension Specialist, Bruce Bordelon acknowledges that grapes can provide diversification for a farm operation that can help offset low prices for other crops. However, he cautions, “…Establishment of a commercial vineyard requires …substantial capital [and] seven to ten years … to recover the [investment] cost…” Startup includes “land preparation, labor, trellis materials, pest management materials, and debt on loans.” As Ray Winter says, he initially needed “a little persuasion” to convince his banker that a vineyard was a good investment. First-year costs alone for site preparation, vine planting, weed control, fertilization, and the rest are calculated by Bordelon at about $5,000 per acre. And there is NO

RETURN until year three, when vines start producing. Of course, costs go down in subsequent years, but Bordelon estimates total investment of $9,100 per acre before the vineyard even produces its first $1,000 of income. •••• As one drives through the local countryside, small oneto five-acre vineyards are highly visible among the much larger fields of corn and beans. One Iowa farmer tells the New York Times, grapes are “the holy grail of high-value crops.” Near Delano, on the western edge of the Twin Cities metro, MPR says the owners of Woodland Hill Winery built their vineyard on seven acres that used to be corn and soybeans. But local ag expert Kent Thiesse says the big thing that holds people back is that grape vines are very labor-intensive. Ray Winter confirms that, saying every acre of vines needs constant weeding and pruning, along with soil testing and spraying. That required devotion is why the Winters’ Indian Island Winery prefers to buy grapes from “serious growers” – mostly professional farmers who know how to tend a crop. •••• Dave and Carol Reedstrom moved back to the family’s century farmstead after phasing out of their long-time jobs in the Twin Cities. As a hobby, they planted 100 grape vines in 1996, “mostly for jelly.” But by 2002, Ray Winter, a cousin, had convinced them to switch to wine grapes.

MN Valley Business • august 2015 • 21

Georg Marti at Morgan Creek also said there was growing demand for La Crescent grapes, used for an increasingly popular Minnesota white wine. Soon 1.1 acres – an area about the size of a football field, that had once supported corn and beans – was home to 600 grape vines. It’s now called “Red Jacket Vineyards,” along Highway 33 north of Rapidan. It’s nestled between a bean field and some sevenfoot corn stalks. “If you’re serious, Dave Reedstrom says, “start small and then see [where it goes.]” You can do some rough math on the economics of grapes versus corn. If current prices hold, a 200-bushel yield on an acre of corn will gross perhaps $720 an acre. Dave Reedstrom says his 1.1-acre vineyard will yield 6,000 pounds of grapes in a good year. At 65 cents a pound, that’s a gross of $3,900. Of course, unlike corn, you can’t do 400 acres of grapes – there’s that labor-intensive part: “If I weren’t talking to you,” Reedstrom smiles, “we’d be out pruning.” Wife Carol, who grew up on a farm, says, “Timing is critical. You have to stay on top of your spray schedule and be watching for fungus. It is a labor of love.” On a sunny July day, we head out into the vineyard. The 28 immaculate rows are each 180-feet long and spaced 10 feet apart. The grapes are pea-sized now, and Dave takes his refractometer from his pocket to test the “brix”, or sugar content. It’s about 3 percent, pretty good for midsummer. Then they do some “canopy management” - some vines with no fruit are pruned off, leaves are thinned to allow more air to circulate and more sunlight in. Dave smiles, “I am happy when I am in the vineyard. It’s my sanctuary.” A big hawk perches on a dead tree that Dave propped up at the edge of the vines. The redtail is their friend, Carol explains, because he scares away robins that like to eat the grapes. So when is harvest?

22 • August 2015 • MN Valley Business

Dave: “Sept. 12!” Carol: “Don’t print that!” Actually, it has to be when the grapes are near 24 brix (where Angie the winemaker likes them) and when she can accommodate the shipment, and of course, before first frost. The Reedstroms will round up 75-100 friends, volunteers “from all over. We work our butts off, pick all the grapes in four to five hours, then have a big potluck!” All their grapes are hand-harvested. They hope to pack six crates, at 900 pounds per crate, and load it onto a grain truck. Dave will then haul it off to Indian Island. Grape growers are very vulnerable to weather. With only a few acres of crop, a late spring frost, an early September frost, a hailstorm or a mega-rain can potentially wipe out most of a year’s production. Federal crop insurance is available, but one needs a production basis established first. At Indian Island, they contract with eight or nine growers, usually for a three- to five-year period, to buy by the pound or by the ton. Those growers supply 40–50 percent of the winery’s grapes. In a good year, Indian Island produces about 90,000 pounds of grapes from their own 15 acres, about three tons per acre, which are machine-harvested. While a number of Minnesota wineries (legally) source a significant portion of their grapes from out of state, even buying premium grapes from California, Winter buys strictly from Minnesota farmers. Recently, Winter has moved into the nursery business: he is now licensed to start grape vines to be sold to other vineyards. They now “deal with hundreds of growers. The idea of having a vineyard seems cool… [Until] about the second year, when they see how much work it is!” Ray Winter grins: “You know how to make a small fortune in the wine business? (pause for effect…) START with a LARGE fortune!” MV

Karen Ballman has a long history in the food industry, including operating former Dunn Bros. stores in Mankato and North Mankato.

Comfort food Garden of Eat’n By Nell Musolf Photos by John Cross

hink comfort food and dishes such as fried chicken, creamy mashed potatoes swimming in gravy and home-baked bread pulled straight from oven often pop into one’s mind. The aromas of those goodies and much, much more greet the customers who walk through the front door at the Garden of Eat’n, 1720 Commerce Dr., North Mankato. “Everyone says how they love the smell when they come in here but we don’t even notice it anymore,” said Karen Ballman, who, along with son Tony, owns and operates the bakery, bistro, coffee shop and catering business. For the newcomer to the Garden of Eat’n, it’s hard to miss the mouth-watering scents. It’s even harder not to want to order at least one of each item listed on the blackboard menu posted over the glass case loaded with baked goods, items ranging from soup to

smoothies with a great deal more in between. The Ballmans have acquired their talent at turning out tasty treats after many years in the food industry. Karen has worked with food for 30 plus years and Tony, one of her six children, has followed in her footsteps. “He has a degree in small engine repair,” said Karen, “but we’ve been working together for quite a while.” The Ballmans are the former owners of the two local Dunn Bros coffee shop franchises that were located in North Mankato and on Madison Avenue in Mankato. Remembering her former coffee shops, Karen said, “I miss the space we used to have. When people see the kitchen we have now compared to what we used to have they’re surprised at how small it is. We also don’t have as much storage as we used to, but it works.”

Spotlight

24 • August 2015 • MN Valley Business

Tony Ballman serves Katie Donahue at the drive-up “It’s a good location,” Tony said. “A lot quieter than worked for the family but had to be let go because she was what we had before. We don’t have all that construction too much of a distraction to the customers. noise to deal with.” “My daughter worked with us for a while but she’s tall Both Ballmans agree that not having to contend with and pretty and the customers used to watch her washing construction has been a big plus of their new location the dishes and kept talking to her all the time. She told me since from 2008 and for years afterwards construction was she couldn’t help it if people wanted to talk but we finally a constant at their Dunn Bros. on Madison Avenue shop. had to let her go,” Karen said with a laugh. “We had about three years of construction starting in 2008,” Tony said. “That was hard. It is much quieter up here. It’s a nice spot. The people are very friendly and we’re happy in North Mankato.” The Garden of Eat’n is tucked behind the Big Dog sports bar in a cozy spot that can seat up to 25 diners and also boasts a drive through window for customers on the go. “About that drive through — I do think we’re missing out on the breakfast crowd,” Karen said. “It seems like a lot of people don’t know that we have a drive through window. We have years and years of experience with fast food. We can get you your breakfast just as fast as any other drive through in town and faster than stopping at a gas station for a breakfast sandwich and coffee.” Breakfast offerings at the Garden of Eat’n include eggs, pancakes and a variety of breakfast meats as well as smoothies, scones and, of course, coffee. Tony is in A fresh case of baked goods is always available. charge of scones and has gotten a reputation as the “scone The coffee brewed at the Garden of Eat’n is fair trade guy.” and is purchased from the European Roasterie out of Le “I was at Wal-Mart when someone came up to me and Center. said, ‘I know you! You’re the scone guy at the Garden of “I really like the coffee we use,” Karen said. “I like that Eat’n” Tony said. it’s fair trade and it’s also delicious.” Tony also handles making the muffins while Karen is the In addition to plain coffee, the Garden of Eat’n has cook and the bread maker. The mother and son duo share lattes, mochas, frappes and espresso drinks to go with the the Garden of Eat’n space well. cookies and rolls they sell. They also have homemade “We get along pretty well,” Karen said. But family soups and a wide variety of pastas. loyalty can only go so far. One other Ballman offspring “I like to offer pastas as a side with our lunches,” Karen

MN Valley Business • august 2015 • 25

said. “I’m not a chip and pickle person so I guess that’s why I like to make different pastas.” Daily lunch specials might include country fried steak or pulled pork slides with a choice of pastas or perhaps chicken quesadillas. In addition to doing the baking and cooking for the patrons who visit their shop, the Ballmans also do catering and make birthday cakes, cookie bouquets and holiday platters. Both Karen and Tony say that running their business keeps them busy but they enjoy the creative aspect that the Garden of Eat’n offers. “I like coming up with Garden of Eat’n, 1720 Commerce Dr., North Mankato, has an intimate setting for customers. new things to make and getting to work on time and Tony rises at the same time trying them out,” Tony said. “There’s always something unless they’re getting a flour delivery. In that case he’s at new to try, some new recipe to play with.” the store even earlier. Open daily from 6 a.m. to 2 p.m. Monday through “We’re used to getting up early,” Tomy said. “It comes Friday and 6 a.m. to 12:30 p.m. on Saturdays, early rising with the territory.” MV is a fact of life for the Ballmans. Karen estimates that she gets up around 2:30 or 3:00 most mornings to assure

26 • August 2015 • MN Valley Business

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Deborah and Brian Fors can do everything from a family history timeline to a large historical project for businesses or individuals.

The History Writers Their passion is your past By Heidi Sampson Photos by John Cross

hile enjoying retirement, Brian and Deborah Fors found themselves listening to a TED Talk featuring Simon Sinek - “How Great Leaders Inspire Action.” TED is a nonprofit foundation whose agenda is to make great ideas accessible and spark conversation. Sinek’s discussion focuses on the “why” of what we do, rather than the “what” we do, or “how” we do what it is we do. Sinek uses examples of strong leadership from Apple, Martin Luther King, and the Wright Brothers. “Those who lead, inspire us,” Deborah said.

“Sinek believes we follow great leaders not because we have too but because we want too.” Sinek also believes that every organization knows what it is they do. Some know how they do what it is they do. However, very few know why they do what it is they do. Sinek doesn’t mean profit - that’s merely a result. By why, he means what’s your purpose, your cause or your belief. Why does your organization exist? From Sinek’s discussion, the Fors decided to push forward with a 20 year old idea, to start their own research company, The History Writers, based in Mankato.

Feature

28 • July 2015 • MN Valley Business

Brian and Deborah Fors started The History Writers business recently after considering the idea for 20 years.

MN Valley Business â&#x20AC;˘ July 2015 â&#x20AC;˘ 29

“When we heard Sinek focus in on the ‘why’ of great leaders, we knew what it was we wanted to do,” Deborah said. “Sinek believes passion lies within the ‘why.’ For us, that was easy. Our passion is history. From there we developed our motto ‘Your Past is our Passion.’ That is our ‘why.’”

The beginnings of why

Over 20 years ago the Fors discussed the possibility of starting their own research company but, looking back, they realized they were in no way ready to do so. A few things needed to fall into place first. Since the initial concept, Brian completed his PhD. in American History from the University of Iowa. While finishing his dissertation, he worked for the National Archives and Records Administration in Washington, D.C. At the National Archives he received training in all aspects of archival work, covering records management, acquisition, appraisal, preservation, processing and public service of historical organizations. He also had the opportunity to become an archivist for the United States Naval Academy in Annapolis. He spent the next 20 years in higher education as both a history faculty member and administrator. He worked at South Central College as dean of Liberal Arts and Sciences. He also devoted many hours to fundraising efforts for non-profits. Seven years ago he retired to pursue his passion for genealogy and family history. Deborah received her undergraduate degree from Minnesota State University, Moorhead obtaining a specialized degree in Scandinavian history and culture with a concentration in museum studies. As a result of the research experience she was hired as a researcher for the University of Iowa Foundation, which began her 25-year career in research and fundraising in Iowa, Minnesota, Maryland and Michigan. Since moving back to Minnesota and retiring from fundraising in 2009 she has been able to focus full-time on family history and genealogical research. Her largest research project to-date was working with NBC/TLC’s “Who Do You Think You Are” episode featuring Cindy Crawford that aired in August 2013. “We’ve actually been doing research for over 20 years,” says Deborah. “However, our company is brand new.”

Their Passion

As an organization, The History Writers helps families, individuals, communities and corporations discover their

30 • July 2015 • MN Valley Business

history, while preserving their records and telling their stories. Their goal is to create a legacy for generations to come. Their historical services include archives and records management for businesses and non-profit organizations. They also work with genealogy and family histories, historical research, analysis and writing. “Everything has a past,” Brian said. “Every person has a past. Genealogy, archives and records, are the actually documents. Those documents can be used to complete history and tell the story.” As a team, Brian’s focus is as a historian and archivist, while Deborah focuses on genealogy and family history. Their clients have included The Betsy-Tacy Society, the Ironwood Historical Society, the Iron County Interpretative Trail Project, NBC/TLC, Naval Academy Library, and families throughout the country and overseas. “We can do a simple timeline, to brochures, to books of varying styles from simple publications, to books with more elaborate and intricate designs,” Deborah said. “We can also create historical websites for communities looking to build a website that would hold their history – written and oral – which, could also be contained in print or through various forms of multi-media.” The History Writers will work with designers for those seeking books, as well as web designers, graphic artists, editors and proof readers while working to finalize their historical projects. Cost depends upon the size of the project. A more comprehensive research project could take up to a year for completion, while a very elaborate project could take up to two years. “It takes a while to find people,” Brian said. “Also, historical research depends upon the age of the museum and how records are kept. It’s important to note that we don’t just write the facts, figures, and dates. We work to build context, or what was happening in the world, during the time a particular person lived. Context is extremely important in all of our writing as it creates a vivid picture or story surrounding the details of a particular persons, or business’ history. While we have specific goals for our business regarding projects, our ultimate objective is to encourage, facilitate and discuss the exploration of the area’s rich history and expand the attention given to historic preservation and in conveying the region’s heritage.” MV

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Construction/Real Estate Residential building permits Mankato

(in thousands)

- 2014 - 2015

11000

3000

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

- 2014 - 2015 275

- 2014 - 2015 9

165

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

Housing starts: Mankato/North Mankato 40

174 98

220

Source: City of North Mankato

Existing home sales: Mankato region

110

55 J

Source: Realtors Association of Southern Minnesota

Source: Cities of Mankato/North Mankato

Commercial building permits Mankato

(in thousands)

- 2014 - 2015

Commercial building permits North Mankato

- 2014 - 2015 (in thousands)

2000 1500 1000

$9,885 $1,236

5.5 5.0

4.3%

4.5 4.0 3.5

3.8% M

Source: Freddie Mac

Foreclosures: 2014 Year End

— 2014 — 2015

Source: City of North Mankato

Interest Rates: 30-year fixed-rate mortgage

$100 $201

500

Source: City of Mankato

3.0

$452

1000

2750

80000 70000 60000 50000 40000 30000 20000 10000 0

$826

2000

$882

5500

- 2014 - 2015 (in thousands)

$3,699

8250

Residential building permits North Mankato

County

2013

2014

Percent change

Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan

101 19 27 70 25 43 39 36 24

72 21 21 47 28 24 22 27 7

-29% +11% -22% -33% +12% -44% -44% -25% -71%

Source: Minnesota Foreclosure Partners Council C. Sankey

MN Valley Business • July 2015 • 33

■

Agricultural Outlook

By Kent Thiesse

Interest high in new Farm Program coverage

arm operators in Minnesota, Iowa, and other Midwestern states overwhelmingly selected the Agricultural Risk Coverage-County (ARC-CO) farm program choice for corn and soybeans for the 2014-2018 crop years. The other farm program choices were the Price Loss Coverage (PLC), or Agricultural Risk CoverageIndividual Coverage (ARC-IC) programs. USDA recently released the results of farm program sign-up, which ended on at the end of March. It appears that the higher likelihood of corn and soybean ARC-CO payments for the 2014 and 2015 crop years in many states probably leaned the choice toward that program. The potential ARC-CO program payments are based on a combination of the 12 month national market year average (MYA) prices for a crop and the average county yields for a given crop for that year. The ARC-IC program payments are calculated in the same manner, except utilizing farm-level annual crop yields. The PLC program payments are based on only the MYA price, compared to crop reference prices. PLC payments occur in any year that the MYA price for corn is lower than $3.70 per bushel, and $8.40 per bushel for soybeans. The MYA marketing year for corn and soybeans runs from Sept. 1 in the year of harvest until Aug. 31 the following year. Any farm program payments occur in October of the year following harvest. Farm program payments are paid on 85 percent of crop base acres for the ARC-CO and PLC program, but only on 65 percent of base acres for the ARC-IC program. This probably accounted for the low enrollment in the ARC-IC program. Following are the results of the new Farm Program signup for the entire United States, listing the total number farms enrolled, total base acres enrolled, and percentage of crop base acres enrolled in each farm program option: • Corn - 1,363,342 farms; 96,768,447 base acres; 93% ARC-CO; 7% PLC; <1% ARC-IC • Soybeans - 1,062,142 farms; 54,514,972 base acres; 97% ARC-CO; 3% PLC; <1% ARC-IC • Wheat - 802,482 farms; 63,699,144 base acres; 56% ARC-CO; 42% PLC; 2% ARC-IC • Barley - 111,277 farms; 5,185,717 base acres; 22% ARC-CO; 75% PLC; 4% ARC-IC • Oats - 49,356 farms; 2,020,243 base acres; 32% ARCCO, 67% PLC; 1% ARC-IC The 2014 Farm Bill allowed farm operators to update their crop base acres for farm program payments, based on their actual planted crop acres from 2009-2012, and several farmers took advantage of the opportunity. In Minnesota, there were 8.8 million corn base acres enrolled in the farm program for 2014-2018, which was an increase of 1.1 million acres from the previous farm program. Just over 5.9 million acres in Minnesota were enrolled as soybean base acres in the new farm program, which was an increase of over 748,000 acres from the previous farm program. Minnesota had large reductions in the amount of wheat, 34 • July 2015 • MN Valley Business

barley, and oats crop base acres for 2014-2018, as compared to the previous farm program. Some observations on enrollment: Ø 99 percent of the corn base acres in Minnesota, and 97 percent in Iowa, were enrolled in the ARC-CO farm program option for the 2014-2018 crop years. The 2014 benchmark price for the ARC-CO program is $5.29 per bushel for corn, which will also likely be the ARC-CO benchmark price for the 2015 crop year.

As a result, there was a very high likelihood for significant ARC-CO payments for the 2014 crop year in Minnesota, Iowa, and portions of other states that had average or below average corn yields in 2014. If corn prices remain at current levels or lower, there is also a high likelihood for significant ARC-CO payments again for the 2015 crop year, depending on the final county average yields Ø Minnesota farm operators also enrolled 99 percent of their soybean base acres in the ARCCO program for 2014-2018, along with 98 percent of the base acres in Iowa. 2014 benchmark price for the ARC-CO program is $12.27 per bushel for soybeans, which will also likely be the ARC-CO benchmark price for the 2015 crop year.

ARC-CO payments for soybeans for the 2014 crop year will be much more variable than with corn, and will occur primarily in areas of the Upper Midwest that experienced below average soybean yields in 2014. Soybean ARC-CO payments for the 2015 crop year could be much more prevalent, especially if soybean prices stay at current levels or drop even lower.

Ø The current USDA estimate for the 2014 MYA price estimate for corn is $3.70 per bushel, and $10.05 per bushel for soybeans. Based on these estimates, there would be no PLC payment for 2014 on either corn or soybeans. There could be a small corn payment if the final 2014 MYA price drops below $3.70 per bushel. 2014 ARC-CO payments for corn in most Southern Minnesota counties will be $70.00-$80.00 per corn base acre. The estimated 2014 ARC-CO payment for soybeans in southern Minnesota ranges from zero to $50.00 per soybean base acre, depending on the 2014 average county soybean yield compared to the 5-year average yield. The high level of statewide enrollment in the ARC-CO program for corn and soybeans in the new farm program exceeded even the highest estimates projected by the farm program analysts. This high level of enrollment, especially in the Midwest, suggests that many producers did their homework, studied the options, and made the best choice

Agriculture/Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2014 — 2015 8

— 2014 — 2015 20

$3.75

$12.15

12 8

Iowa-Minnesota hog prices

Source: USDA

Milk prices

185 pound carcass, negotiated price, weighted average

— 2014 — 2015 140

$9.93

$3.36

Source: USDA

$24.66

110

Minimum prices, class 1 milk Dollars per hundredweight

— 2014 — 2015 30

125

95 80 65 50

(dollars per bushel)

Soybean prices — southern Minnesota

$132.18

$77.77

Source: USDA

$17.94 J

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

for their farms. It also suggests that cash flow levels in corn and soybean production are very tight in many areas, and that having the likelihood of fairly substantial ARC-CO payments in 2015 (2014 crop year) and 2016 (2015 year) looked very attractive to reduce the financial risk. MV Kent Thiesse is farm management analyst and vice president, MinnStar Bank, Lake Crystal. 507381-7960; kent.thiesse@minnstarbank.com

Source: USDA. Based on federal milk orders. C. Sankey

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MN Valley Business • July 2015 • 35

Employment/Unemployment Initial unemployment claims

Minnesota initial unemployment claims

Nine-county Mankato region Major July Industry ‘14 ‘15 Construction Manufacturing Retail Services Total*

117 206 51 267 641

Percent change ‘14-’15

92 248 35 232 607

Major Industry

-21.4% +204% -31.4% -13% -5.3%

July

Construction Manufacturing Retail Services Total*

‘14

‘15

Percent change ‘14-’15

2,289 2,587 1,155 6,225 12,256

2,000 2,674 939 6,110 11,811

-12.6% +3.4% -11.1% -1.8% -3.6%

Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don’t equal total because some categories not listed.

Local non-farm jobs

Minnesota Local non-farm jobs

- 2014 - 2015

Nine-county Mankato region 126,376

133000

(in thousands)

122000

2000

111000

1000

100000

Local number of unemployed

- 2014 - 2015

Nine-county Mankato region

8000

- 2014 - 2015

125,593 109,388

150000

5,308 4,725

6000

Minnesota number of unemployed 200000

10000

100000

4000

50000

2000 0

2,867 2,920

3000

126,556

- 2014 - 2015

Mankato/North Mankato Metropolitan statistical area

Unemployment rate Number of non-farm jobs Number of unemployed

2014

2015

3.1% 55,465 1,802

2.9% 57,185 1,703

Source: Minnesota Department of Employment and Economic Development

36 • July 2015 • MN Valley Business

Unemployment rates Counties, state, nation

(includes all of Blue Earth and Nicollet Counties) May

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

May 2014 3.2% 4.2% 4.8% 4.5% 3.9% 2.8% 4.0% 6.2% 4.4% 3.7% 3.8% 6..1%

May 2015 3.0% 4.2% 4.2% 4.1% 4.4% 2.8% 3.8% 5.3% 4.4% 3.5% 3.6% 5.3% C. Sankey

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2013 - 2014 1200

884

1000

798

800

$406

$387

400

100

200 J

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato $56,900 $45,279

60000

Source: Sales tax figures, City of Mankato

Mankato food and beverage tax

- 2013 - 2014

85000

50000

$55,837 $59,000

68000

40000

51000

30000

34000

20000

17000

10000 J

Source: City of Mankato

Gas prices-Mankato — 2014 — 2015

- 2013 - 2014

500

200

400

(In thousands)

300

600

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

Sales tax collections Mankato

Stocks of local interest

June 17

July 14

Percent change

Archer Daniels

$50.94

$47.63

-6.54%

Ameriprise

$128.35

$128.08

-6.2%

Best Buy

$34.01

$34.36

+1.0%

Crown Cork & Seal

$54.98

$54.21

-1.4%

Consolidated Comm.

$21.17

$20.32

-4.0%

Fastenal

$42.71

$41.64

-2.5%

General Growth

$27.09

$26.33

-2.8%

General Mills

$55.25

$56.90

+3.0%

Hutchinson Technology

$1.99

$1.44

-27.6%

Itron

$35.14

$31.86

-9.3%

Johnson Outdoors

$24.04

$23.89

-0.6%

$156.95

$156.72

-0.1%

Target

$82.10

$83.59

+1.8%

U.S. Bancorp

$44.63

$44.85

+0.5%

Wells Financial

$28.35

$28.20

-0.5%

Winland

$1.46

$1.65

+13%

Xcel

$32.57

$33.34

+2.4%

$3.55

$2.53

1 0

Gas prices-Minnesota — 2014 — 2015

$3.47

4 3 2 $2.66

1 0

Source: GasBuddy.com C. Sankey

MN Valley Business • July 2015 • 37

Minnesota Legislative Session Recap By: Patrick Baker, Director of Government & Institutional Affairs, Greater Mankato Growth

Greater Mankato Growth

fter 10 years of budget deficits, the Minnesota Legislature convened in January with high hopes among Legislators and advocates that with the state’s $2 billion budget surplus major deals could be struck on taxes, transportation and other priority issues. However, as the regular legislative session ended in May none of these priorities were accomplished. In addition, several budget bills were left unpassed or vetoed by Governor Dayton, necessitating a special session in June. When the dust settled, Only 80 bills were presented to the Governor, the fewest number of laws enacted in a regular session since Minnesota’s statehood. As a result, this Legislative Session may be remembered more for what was left on the table undone than what was passed. However, the Legislature did pass several measures that will impact businesses and our region. A summary of those key issues follows. Overall Budget – Minnesota’s state government will spend about $42 billion during the two year budget, which began July 1, up from $40 billion during the previous two years. Transportation – It was supposed to be the “Transportation Session” with the promise of a comprehensive long-term funding solution to meet the state’s growing infrastructure needs. While the House, Senate and Governor all proposed bills recognizing the significant long-term funding gap

38 august 2015 1 •• JANUARY 2013 • MN Valley Business

faced in transportation, they could not agree on whether an increase in the gas tax should play a role as a source of new transportation revenue. Instead, a “lights on” transportation funding bill was all the Legislature could muster this year. Tax Bill – House Republican plans for a major tax cut bill went unfulfilled as no tax bill was passed this year. Since there was no tax bill, Mankato and North Mankato’s proposal to extend their local .5 cent local sales tax went unpassed. Greater Mankato Growth and Visit Mankato will continue to support and develop a recreational facilities plan with the expectation that the sales tax extension request will be renewed for the 2016 legislative session. Education/Workforce – The state’s higher education systems will receive an additional $166 million over the next two years, including an additional $100 million for the Minnesota State Colleges and Universities System. Most of that funding will go towards tuition relief. The Legislature also approved an additional $525 million for E-12 education which will provide for a 2% increase in the general education formula each of the next two years and provide significant new funding for scholarships for early childhood education. The Legislature aenacted a handful of new policy provisions including a set of new job training and

Greater Mankato Growth held a Legislative Recap session on June 19 in Mankato.

business/education partnership programs, a major workers’ compensation cost saving reform and a small pilot grant program for workforce housing. Nursing Homes – Nursing homes will receive $138 million in new funding, largely to boost employee compensation. Buffer Strips – A key priority of Governor Dayton, Lawmakers settled on buffer zones between row crops and public waters that average 50 feet with a minimum of 30 feet. Public ditches get 16.5-foot buffers and local officials will work with landowners to protect private ditches. Fines were also adopted for non-compliance.

Sunday Sales – Both the House and Senate took votes that rejected a proposal to end Minnesota’s ban on Sunday liquor sales. However, the Legislature did pass a bill allowing growlers of beer to be sold by breweries on Sundays. Broadband – The Border-to-Border Broadband Development Grant Program, which helps connect unserved and underserved regions connect to highspeed internet, will get $10.8 million.

Greater Mankato Growth will continue to ensure that businesses remain up to speed on key issues impacting them and our region so that they can be their own best advocate.

Patrick Baker , Director of Government & Institutional Affairs, Greater Mankato Growth

MN Valley Business • august 2015 • 39

Greater Mankato Growth

The Legislature will convene for its 2016 session on March 8. Because of ongoing renovations to the capitol building, the capitol will be almost entirely closed, save for the House Chamber, while the Senate will meet in its new office building. It’s anticipated that the legislature will have $1 billion in unspent surplus dollars that will be the basis to reach a deal on new transportation spending and tax reductions. A bonding bill will also likely be taken up in 2016.

Thank you Sponsors and Golfers

Greater Mankato Growth

for another great year on the green!

Closest to Target Challenge Winner Joe Marinac | BMO Harris Bank

40 august 2015 1 •• JANUARY 2013 •• MN MNValley ValleyBusiness Business

ers

Music Line Up: August 13 - The Dead Pigeons August 20 - Crankshaft and The Gear Grinders August 27 - The Whiskies September 3 - Gypsy Lumberjacks Sponsored by:

Alive After 5 sponsored by Schell’s Brewery returns to Greater Mankato this August on Thursdays from 5 – 8 pm in Jackson Park. Gather with your co-workers, friends or family to enjoy live music, food and beverages in the relaxed outdoor setting of City Center Mankato. Mark your calendar and be sure to join us on August 13 as the Alive After 5 free summer concert series kicks off. Learn more at citycentermankato.com

reen!

5:00 - 7:00 pm August 4 September 1 October 6 November 3 December 1

Unique Specialty & Classics Mayo Clinic Health System - Eastridge I+S Group Blethen, Gage & Krause Gislason & Hunter

2015 Business After Hours Sponsored by:

August 19 September 16 October 21 November 11 December 16

Minnesota Valley Federal Credit Union Vista Prairie at Monarch Meadows South Central College Consolidated Communications Wells Federal Bank

2015 Business Before Hours Sponsored by:

June Business Before Hours hosted by McDonald’s Restaurant

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

MN Valley Business • august 2015 • 41

Greater Mankato Growth

June Business After Hours hosted by First National Bank Minnesota & Tavern on the Avenue

7:30 - 9:00 am

RIBBON CUTTING

Growth in Greater Mankato

GROUNDBREAKING BankVista 1650 Madison Avenue Mankato, MN

Brookdale Mankato 100 Teton Lane Mankato, MN

RIBBON CUTTING

NEW BUSINESS

GRAND OPENING

GRAND OPENING Kia of Mankato 160 St. Andrews Drive Mankato, MN

Mills Fleet Farm 1850 Premier Drive Mankato, MN

Open Door Health Center 309 Holly Lane Mankato, MN

NEW BUSINESS

Cavaliers

GROUNDBREAKING

Greater Mankato Growth

The Bicker Inn 100 East Walnut Street Mankato, MN

Knutson+Casey, PLLP 196 St. Andrew’s Drive, #100 Mankato, MN knutsoncasey.com

Cavalier Calls on the Newest Greater Mankato Growth Members

Lil Bee’s Learning Center 1821 Bassett Drive, Suite 103 Mankato, MN lilbeesmankato.com

42 August 2015 1 •• JANUARY 2013 •• MN MNValley ValleyBusiness Business

American Red Cross Serving Southwest Minnesota 105 Homestead Drive Mankato, MN redcross.org/mn/chapters/southwest

Mainstream Boutique Mankato Heights Plaza 1901 Madison Avenue East Mankato, MN mainstreamboutique.com/newsite

Using Visitor Events to Drive Business Expansion By Kathryn Reeder, Brand Manager,Visit Mankato

isit Mankato and Greater Mankato Growth (GMG) are hopping on board with an emerging, successful trend that involves cross-pollination between visitor driven events and traditional economic development activities.

For example, conventions are coming that may bring with them attendees that GMG may have high interest in because they are connected to a business that GMG would like to see locate or expand in the area. Visit Mankato can connect with the meeting planner to coordinate a meet and greet between those attendees and GMG. This example has played out in Indianapolis where Visit Indy and the Indiana Economic Development

This is about taking visitor experiences and creating a business opportunity out of it. For Visit Mankato and Greater Mankato Growth, it’s a simple three step process that yields great outcomes. Below are the steps that will be taken concerning conventions: 1.Visit Mankato conducts research once a convention is booked in Mankato to learn more about the attendees and then consults with Greater Mankato Growth to decide if there is potential to make connections. 2.Visit Mankato’s Convention Sales Director reaches out to the meeting planner to pitch the idea of coordinating a meeting with select convention attendees to meet with GMG and potential partners.

opportunities in the area including a possible tour of the community. The opportunity also exists to take this partnership beyond just conventions, to all major events that take place in the destination, whether it’s a conference, leisure event or sporting event. Visit Mankato and Greater Mankato Growth had a perfect pilot of this cross-pollination teamwork and eagerly jumped in last month (July). The World FITASC Sporting Championship was hosted at the Caribou Gun Club in Le Sueur last month, with approximately 800 attendees staying in Mankato and frequenting restaurants and attractions. This event brought world travelers that are business owners and high level decision makers representing 30 countries and many from around the United States. Greater Mankato Growth hosted a VIP reception with a select few to set the stage for future business connections that could lead to more jobs down the road. This is a new and exciting direction for Visit Mankato and Greater Mankato Growth. The innovative economic development strategy is a business integration and collaboration on a whole new level and the potential is significant.

3. At some point in the convention, attendees are greeted by Greater Mankato Growth economic development staff and introduced to

MN Valley Business • August 2015 • 43

Greater Mankato Growth

DMOs (Destination Marketing Organizations) like Visit Mankato around the nation are successfully partnering with their EDOs (Economic Development Organizations) to align their meetings and events more closely with economic development activities to target new industries and business growth. Both organizations are affiliates of Greater Mankato Growth, Inc. and are often times targeting the same companies and individuals for different reasons but for the same goals, enhancing the already vibrant marketplace. While Visit Mankato is busy engaging associations and companies to bring their events to the city, Greater Mankato Growth wants to entice them to relocate, open branch offices or develop longterm business relationships. Event planners can help connect the dots between the two.

Corporation (IEDC) worked together on the National Rifle Association’s 2014 Annual Meetings & Exhibits, which was held in Indianapolis last April. IEDC was looking for ways to better reach out to exhibitors and attendees who have the ability to make decisions about bringing businesses to Indiana. So, the National Rifle event wasn’t just a matter of the dollars and cents it was going to spend over the course of four days, it was also about leveraging 76,000 people in town for four days and figuring out among that 76,000 who were some key decision makers to help potentially bring many jobs to the state.

Life is full of little squeezes…

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Local Business People/Company News

■

Bluth named top lawyer

Joseph Bluth of High Conflict Mediation and Arbitration Services, North Mankato, has been named by Super Lawyers magazine as one of the top attorneys in Minnesota for 2015 in alternative dispute resolution. Bluth has been on the list since 2003. He is also a family law mediator.

Waters joins Open Door clinic

Open Door Health Center added Liz Waters as a certified nurse practitioner. She joins Dr. Kimberly Wernsing and nurse practitioner Doreen Krause. Waters received her Master of Science in Nursing as a family nurse practitioner from Minnesota State University and has worked as a primary care provider since 2011. She takes a special interest in women’s health, diabetes education, and health promotion.

■■■

Toppers in Hall of Fame

Mankato Toppers Pizza owners Phil and Denise Downing were inducted into the Toppers Pizza Hall of Fame during the Toppers Annual Convention. Only six other owners have been inducted ■■■

Liz Waters

■■■

Hay of Swanson Hinsch certified

Samantha C. Hay of Swanson Hinsch & Co. has earned her Certified Public Accounting designation. She assists in various bookkeeping and tax areas including: preparing payroll and financial reports along with preparing and reviewing tax returns. She graduated from Dakota State University in Madison, South Dakota in May 2013.

Gordon, Stoltenberg join Brunton

B r u n t o n Architects & Engineers have added Michael Gordon and Leslie Stoltenberg to their staff. Gordon is Operations Manager and brings 35 years architectural Michael Gordon Leslie Stoltenberg of experience in both design and management. Stoltenberg is Chief Financial Officer after spending 26 years with Taylor Corporation. She comes to Brunton with 15 years of executive leadership experience and a broad business background including account management, business strategy, financial reporting, marketing, and customer relations.

Samantha C. Hay ■■■

Minn. Chamber has new leader

The Minnesota Chamber of Commerce selected Douglas B. Loon as its new president. Loon is a vice president at the U.S. Chamber of Commerce and will fill the vacancy left by David Olson who passed away last July. Loon will resign his post at the U.S. Chamber and assume his new role on Sept. 8.

■■■

Love joins Pioneer Bank

Katelynn Love has become an investment advisor for Minnesota Financial Services, offering services through Pioneer Bank. Love’s office is in Pioneer Bank’s St. James branch. Love is a 2012 graduate of St. James High School and a 2015 graduate of Minnesota State University with a degree in Finance.

Katelynn Love ■■■

Douglas B. Loon ■■■

Clements merges with SouthPoint

Clements Federal Credit Union members voted in favor of a merger between their organization and SouthPoint Federal Credit Union at a special meeting. Clements Federal Credit Union began as a community chartered credit union in 1960. With 297 members, they have $403,655 in assets. SouthPoint Federal Credit Union began in 1936 and currently serves 13,700 members with over $285 million in assets.

Consolidated donates to CADA

The Consolidated Communications Community Fund (formerly Enventis) gave a $9,000 grant to the Committee Against Domestic Abuse in support of the CADAlearn education program and upgrades to the facility’s camera system.

MN Valley Business • august 2015 • 7

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CONGRATULATIONS, Open Door Health Center!

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BROKERAGE – DEVELOPMENT – MANAGEMENT

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MN Valley Business • august 2015 • 19

INTRODUCES YOUR

In addition to the MSP Airport, Land to Air Express now offers multiple daily trips from Mankato to Rochester and Southern MN destinations in between. Convenient Mankato shuttles are still available every day to and from the Minneapolis International Airport.

Read us online! Visit landtoairexpress.com or call 507-625-3977

Is your business adequately insured? Do you have the best coverage for your business? From commercial property to liability and workers’ compensation, Community Insurance can fit you with the perfect policy. Before a loss occurs, let us help you find the coverage that protects what’s important to you.

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MN Valley Business • august 2015 • 23

Thank You for voting us #1

Best of Mankato Best Auto Repair Best Auto Mechanic : L ynn Austin

AUSTIN’S AUTO REPAIR CENTER INC. 1620 Commerce Drive, North Mankato

www.AustinsAutoRepairCenter.com

507-387-1315

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Mankato, MN

Civil and Municipal Engineering Water and Wastewater Engineering Traffic and Transportation Engineering Aviation Planning and Engineering Water Resources Engineering Coatings Inspection Services Landscape Architecture Services Funding Assistance Surveying and Mapping

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Building responsive, healing and caring environments. From clinics and medical office buildings to hospitals and research facilities, at ISG we help clients plan and design integrated healthcare facilities that advance their core mission—providing exceptional care for their patients and environments to help patients heal, strengthen and thrive. We work to meld together settings that enhance patient care and comfort, are responsive to staff requirements and embrace advancing technologies while maintaining inviting, safe, easily navigable and supportive environments for patients.

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32 • July 2015 • MN Valley Business

ENVIRONMENTAL

PLANNING