Minnesota Valley Business by Free Press Media

The Definitive Business Journal for the Greater Minnesota River Valley

Coach Des Christopher owns the Goalie Club. Photo by Pat Christman

Play hard Sports & rec big business in region

July 2019

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Insurance Coverage Issues By Dustan Cross crucial part of disaster preparation is understanding what insurance coverages you have and what they will, or will not, cover. Unfortunately, insurance policies are often lengthy and complex. They may include multiple parts and incorporate language which can be difficult to understand. Some things to keep in mind regarding your insurance coverages include the following:

3. Review the Forms and Endorsements. As noted above, the policy declarations will identify the forms and endorsements which make up the entire policy. Often there will be a basic policy form for property coverage and another basic form for liability coverage which are supplemented, and in many cases amended, by multiple other forms or endorsements.

1. Basic Types of Insurance. As a very general proposition, insurance can be divided into two basic categories: property damage coverage and liability coverage. Property damage coverage protects against losses arising from damage to or destruction of property owned by the insured as a consequence of perils such as fire, wind, or accident

4. Do Not Hesitate to Ask Questions. As also noted above, insurance policies are often voluminous and include language which is not easy to understand. This can be particularly true when it comes to coverage exclusions. It is a good practice to meet with your insurance agent or broker on at least an annual basis to review your coverages and ask any questions you may have.

2. Review the Policy Declarations as a Starting Point. Insurance policies generally include what are referred to as policy declaration pages or sheets which identify the coverage being provided and set forth other basic information specific to that coverage. This information will generally include the name and address of the insured or insureds, the starting and ending dates of the coverage, premium information, the amounts or limits of the coverage, the forms and endorsements which make up the policy, and, in the case of property insurance, the premises or locations which are covered.

5. Keep Your Insurer Updated. You should also make sure to promptly advise your insurer of any significant changes to your operation including, for example, the addition of any land, buildings, or significant machinery/equipment. Donâ&#x20AC;&#x2122;t wait for an annual meeting or the policy renewal time to do this. There is also particular information which must be provided relative to crop and livestock insurance, and you should work closely with your agent to make sure that is done on a timely basis.

6. Be Familiar with Loss Notification and Cooperation Requirements, and Make Sure You Comply with Them. As part of your policy review, you should make sure you are familiar with what needs to be done by you in the case of a loss or an event that could give rise to a claim against you. Insurance policies include specific requirements regarding prompt notification to the insurer of losses and claims (including potential claims), as well as other duties that the insured has in such circumstances; these duties include a duty to reasonably cooperate with the insurer. 7. Be Cautious of Specialty Policies. Minnesota allows insurance companies who are not licensed in this state to provide coverages which are unavailable from licensed insurers. These companies are referred to as surplus lines insurers. Insurance considerations are an important part of disaster planning and response. Insurance can provide important protections, but there are also limitations to it. Maximizing the protections, while at the same time understanding and acting upon the limitations, can make a significant difference in the impact a disaster may have on your operation.

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F E A T U R E S July 2019 • Volume 11, Issue 10

From hockey and softball to golf and pickleball area businesses provide the equipment, organization and training to help the casual or serious participant in sports and recreation.

For 70 years, Nordaas American Homes has made it through rough patches and good times by paying attention to customers’ needs and adding the latest technology.

Jason Quint was researching ways to beat the bugs in his backyard when he stumbled across a business opportunity and now runs the Mankato Mosquito Squad.

Customers walking into Greg’s Champion Auto in Mankato are often surprised by the plush surroundings and the patient, cheerful service they get at the auto repair shop.

MN Valley Business • JULY 2019 • 3

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JULY 2019 • VOLUME 11, ISSUE 10

By Joe Spear

PUBLISHER Steve Jameson EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Dean Swanson Dan Greenwood Dan Linehan PHOTOGRAPHERS Pat Christman Jackson Forderer COVER PHOTO Pat Christman PAGE DESIGNER Christina Sankey ADVERTISING Danny Creel Sales Joan Streit Jordan Greer-Friesz Josh Zimmerman Marianne Carlson Theresa Haefner ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Justin Niles DIRECTOR For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6364, or e-mail advertising@mankatofreepress.com. MN Valley Business is published by The Free Press Media monthly at 418 South 2nd Street Mankato MN 56001.

■ Local Business memos/ Company news.....................................5 ■ Business Commentary.........................7 ■ Business and Industry trends..........22 ■ Retail trends.....................................23 ■ Agriculture Outlook..........................24 ■ Agribusiness trends..........................25 ■ Construction, real estate trends.....26 ■ Gas trends........................................27 ■ Stocks...............................................27 ■ Minnesota Business updates............28 ■ Job trends.........................................28 ■ Schmidt Foundation.........................30 ■ Greater Mankato Growth..................32 ■ Greater Mankato Growth Member Activities ............................34

From the editor

Recreation grows as a business

This month’s cover story on the business of recreation offers a new way of thinking about businesses that grow the economy. You don’t often think of the business of sports and recreation when someone mentions GDP. You’re more likely to think of more visible places like manufacturing factories or retail stores. But the business of recreation and sports appears to be happening all around us in Mankato. From a very specialized “goalie school” to an “everyone can try it” kind of thing like pickle ball, it seems there’s something for every taste when it comes to spending money to have fun, be competitive or just get active. The offerings go from private businesses like sports equipment rentals to public offerings like the Mankato schools Community Education and Recreation department. The volume of people participating in all kinds of sports seems impressive. At the Community education department, there are some 122 softball teams and 95 sand volleyball teams. The organization served 5,000 adults last year and that number grows by about 700 per year. Again, impressive. It’s hard to say whether the Mankato region is more active than other regions of the state, but it would be hard for anyone to live here and be without some sort of recreational activity that suits them. Some of the activity can, like many other amenities, be tied to the higher education institutions in the area. They offer not only a population ready to be active, but they have their own facilities that kind of prime the pump of recreational business. Former MSU student and Division I goaltender Des Christopher is just one example of how the merger of higher education and recreation can create local business opportunity. Christopher got his master’s in

4 • JULY 2019 • MN Valley Business

educational leadership and for a time was a volunteer goalie coach for the Mavericks. Eventually he was hired by Shattuck St. Mary’s as their goalie coach. Then he opened the Goalie Club, which now offers camps, clinics and private lessons. Players attend weeklong camps at Shattuck down the road in Faribault, and other camps and clinics take place at All Seasons Arena. Co-owners of Play it Again Sports Andy Oberle and Steve Eckers provide some of the equipment for those players. “It’s fun for us. Each new season you move onto the next thing. When you get sick of fitting skates, here comes baseball,” Oberle said. But the business of sports is not just for the young. The Mankato Area Pickleball Association is growing by leaps and bounds, according to John Sandry, president of the group. The health benefits draw more and more seniors to the game. “I’m 73. I can get out there and get some good exercise. It’s healthy, very addictive, a great social gettogether. That’s one of the biggest parts of it, socializing.” There were just 20 members of the group a few years ago. Now, it’s up to 175. “It’s the fastest-growing sport in America. It started 52 years ago, but in the last 10 years it’s just exploded,” Sandry said. The community has committed to investments in recreation. A local option sales tax was approved for Mankato and North Mankato a few years ago by a near 70 percent margin, with the intended use of the money for recreational facilities. Those plans are now just starting to come fruition with proposals for a new ice hockey and skating rink facility and a proposed second YMCA with large swimming pool on the drawing board. Those two projects alone could total a $40 million investment. Those facilities will compete for limited public dollars but also seem

to have commitments from players, families and generous donors. There are also plans to discuss expansion of Caswell Park softball complex that this summer is hosting its first ever women’s professional softball team in the Aussie Peppers. The first game drew and impressive crowd, many from outside the region. This fall, Minnesota State University will debut its new “sports bubble” after students overwhelming approved funding for it from student fees. And a new field house and soccer complex are in the works for Bethany Lutheran College. Add to this burgeoning of local sports and recreation facilities things like the Mankato Civic Center and Franklin Rogers Park, Mankato’s place as a sports and recreational mecca is becoming clear.

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 ■

Anderson SBDC State Star

T h e Minnesota Small B u s i n e s s Development Center Network has announced W e n d y Anderson as the Minnesota SBDC State Star for 2019. Wendy Anderson The award recognizes top business advisors and staff in the SBDC program who make significant contributions to their state, demonstrate exceptional performance, and embody a strong commitment to small businesses. Anderson ser ves as senior financial consultant for the South Central Region SBDC, hosted at Minnesota State University, Mankato. She has touched at least 2,200 clients, facilitated $87 million in capital for business investment, and supported more than 80 business starts/ purchases. In addition to areas of finance, she is an advisor in feasibility analysis, high-level marketing strategy, operations, succession planning and turnaround assistance. Her work spans companies ranging from early stage ventures to large enterprises. ■■■

Mankato Area Public Schools (MAPS) Hires New Ag Teacher

Mankato Area Public Schools has hired a new ag teacher for the first time in 25 years. Ethan M. Dado will start at the beginning of the 2019-20 Academic Year as the Mankato agricultural education teacher. Dado is originally from Amery, Wisconsin, where he was raised on his family’s 500-cow, 1,300-acre dairy and crop farm. He earned his degrees at University of Minnesota. “Since the inception of GreenSeam, we have been working with Mankato Area Public Schools to add programs which support the many businesses we have right here in our region,” David Krause, chair of the GreenSeam board of governors said in a statement. ■■■

Crown earns safety award

Crown Beverage Packaging, a subsidiary of Crown Cork & Seal USA, was recognized for excellence in workplace safety and health during the Governor’s Safety Awards ceremony in May. Crown is one of 294 employers to be honored through the awards program, coordinated by the Minnesota Safety Council. Crown has been making beverage packaging in Mankato, MN since 1990.

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MN Valley Business • JULY 2019 • 5

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Liz Thiesse Joins The Landline Company

Liz Thiesse has joined The Landline Company as the Mankato station manager. Landline operates from the Mankato Regional Airport. It is a regional transportation service that operates five buses non-stop daily to and from Mankato to Minneapolis. She spent 22 years at a local advertising agency representing Subway Restaurants for 21 locations in Southern Minnesota.

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Rule joins Eide partnership

Tonya Rule was accepted into the partnership of Eide Bailly, a regional cer tified public accounting and business advisory firm. Rule is part of Eide Bailly’s national tax office and specializes in the Affordable Care Act (ACA). She works with businesses both large and small on the rules surrounding the ACA. She joins 20 other staff members who became partners or principals across the firm.

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Lopau named sales manager

Mike Lopau has been named a district sales manager for Wyffels Hybrids. He will work directly with corn growers in southwest Minnesota. Lopau has many years of sales and agronomy experience. He will work with growers in Watonwan, Martin, and Blue Earth counties. Wyffels Hybrids, headquartered in Geneseo, Ill., is one of the nation’s largest independent seed corn companies.

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Business Commentary

By Dean Swanson

Use Business Model Canvas to review your operation

s a SCORE Mentor, I and my colleagues stress n Key Activities — What are the most important the importance of a business plan not only for a activities you must engage in to fulfill your value startup business but for those that are in propositions, to secure distribution channels, to business because it should be a living document (one strengthen customer relationships, to optimize that is always checked and revised). In addition, we revenue streams, etc.? encourage CEOs to look at their business from various perspectives to help them stay on target but n Key Resources — What resources do you need to also to plan future growth. create value for your customers and sustain your This week I got a request for a topic as I was riding business? an elliptical machine at the athletic club. The person next to me is a regular reader and he n Value Propositions—What asked me for an example of a tool that products and services will you offer Many start up can be used for a business to accomplish to meet the needs of your customers? a review in preparation for a growth How will your business be different entrepreneurs and plan. I will devote this column on one from your competition? What such example. challenges will you solve for your The Business Model Canvas is an small businesses are so customers? entrepreneurial tool that enables you to visualize, design, and reinvent your n Customer Relationships — busy trying to get business model. It was developed by What types of relationships will you Swiss business theorist and author forge with your customer segments? started and survive Alexander Oster walder. For many What are the relationship startups, using the tool can help them expectations of each customer that they spend little develop a clear view of their value segment? How are they entwined proposition, operations, customers, and with the rest of your business model? finances. As a small business owner, time planning you can use it to identify how the n Customer Segments — What different components of your business relate to each sets of customers will you serve? Which are most other. That’s powerful when deciding where you need important to your business? to focus your time and attention as you start and grow your business. n Channels — Through what means will you reach “Many start up entrepreneurs and small businesses your targeted customers and deliver your products are so busy trying to get started and survive that they and services to them? Which are most cost spend little time planning. When they do try to plan, effective? How are the channels integrated? they are often confused and don’t know where to start,” explains Bruce Gitlin, a SCORE mentor and n Cost Structure — What are the key costs your business development expert. “This tool sets an business will face? Which resources will cost the overarching framework for developing a business most? Which activities will cost the most? strategy, a detailed business plan, and/or a prioritized action plan.” n Revenue Streams — How much will you charge for According to Gitlin, the Business Model Canvas can your products and services? What are customers help move entrepreneurs to address specific risks and willing to pay for? How will customers pay? How acquire more information (about competitors or a much will each revenue stream contribute to your market niche, for example). overall revenue? The Business Model Canvas has nine different areas of focus that make up building blocks in a visual According to Gitlin, gaps in planning stand out when representation of your business. using the tool, making it effective for entrepreneurs n Key Partners — Who are the buyers and suppliers who are new to starting and running a business. you need to form relationships with? What other alliances will help you accomplish core business Dean Swanson is a volunteer SCORE Mentor and activities and fulfill your value proposition to Regional Vice President for the North West Region. customers? www.seminnesota.score.org

MN Valley Business • JULY 2019 • 7

Des Christopher said he works to make sure kids are having fun but working hard and learning. Photo by Pat Christman

Play hard Businesses cater to sports, recreation By Tim Krohn | Photos by Pat Christman and Jackson Forderer

hether it’s time on the ice, a summer evening sand volleyball game or a social game of pickleball, the Mankato region is rich with sports and recreation opportunities, and plenty of businesses and organizations are available to help people get some exercise and hone their skills. Thanks to the local strength of hockey and the popularity of the Minnesota State University Mavericks, Des Christopher has a full calendar at his Goalie Club goalie school business.

Based in Mankato and at Shattuck St. Mary’s in Faribault, the Goalie Club hosts clinics and camps that draw people from around the world. A seasoned player and coach, Christopher said he and his crew teach everything from the basics to advanced strategy. “You have to stay on top of any changes in the game. But as things change, they stay the same: You have to keep the puck out of the net,” he said. “But there are new techniques to take more space out of the net. I watch a ton of hockey and goal tending and watch

Cover Story

8 • JULY 2019 • MN Valley Business

Des Christopher works with students at All Seasons Arena. Photo by Pat Christman where the players shoot from.” Andy Oberle co-owns Play it Again Sports in Mankato with Steve Eckers. The shop is the leading provider of hockey gear and services but also sells new and used sports equipment for virtually any game that is played. “It’s fun for us. Each new season you move onto the next thing. When you get sick of fitting skates, here comes baseball,” Oberle said. Seth Hoscheit, recreation coordinator at Mankato Area Public Schools Community Education and Recreation department, oversees a wide variety of youth and adult sports and rec programs in the district. Softball leagues remain a huge part of program. “We have 122 teams for softball this year. And volleyball has really grown, we have 95 sand volleyball teams,” Hoscheit said. And, he said, there’s growing demand for places to play pickleball. John Sandry, president of the Mankato Area Pickleball Association, said the growing popularity of the game is easy to understand. “I’m 73. I can get out there and get some good exercise. It’s healthy, very addictive, a great

social get-together. That’s one of the biggest parts of it, socializing.”

Hockey training

The Goalie Club was started in 2002. Christopher grew up in Calgary and was among those recruited to the first Division I Mavericks class in 1994. He played at MSU until 1998 before going to Germany for a year to be in a minor/pro league and then to a minor professional league in Texas. Christopher returned to get his master’s in educational leadership and was a volunteer goalie coach for the Mavericks before being hired by Shattuck in 2005 as their goaltender coach. The Goalie Club offers camps, clinics and private lessons and travels around the world. At Shattuck, a boarding school, people in the weeklong camps are able to stay on site, have meals and take part in the camps all on one campus. Mankato camps and clinics take place at All Seasons Arena. “For me there’s three parts to it. You have to have the kids engaged and enjoy what they’re doing, it’s got to be fun. But it has to be work as well, and it has to be educational.”

They teach basic skating fundamentals to the beginner kids then move to situational programs as they improve. “That is more game situation type learning, two-on-ones, wrap arounds, whatever can happen in a game. Then there’s a higher leader program with an even more ramped-up program.” For weeklong camps there are three price points: People pay $545 if they’re in a group of three goalies to one station. The cost for two goalies to a station is $845 and one-to-one training is $1,690. The camps draw from far and wide. “We have goalies from all over — Canadian, Finns, Swedes, Russians, Germans.” He said being based here works well. “Southern Minnesota is a good market for us. I have ties to different associations and the way the Mavericks are playing and their success has created a lot of buzz about the team and hockey in general.”

Community rec

Hoscheit said participation in recreation has climbed steadily, with the school district department serving more than 5,000 adults last year and thousands more in a wide variety

MN Valley Business • JULY 2019 • 9

Tony Vetter (right) and his teammates on the Big Dog softball team get warmed up before a game at Jaycee Park. Photo by Jackson Forderer

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10 • JULY 2019 • MN Valley Business

of youth programs. “We’ve been growing about 700 people a year in youth programs with adult rec staying pretty steady over the years,” Hoscheit said. With a dizzying array of options, the department tries to stay up on what people want more of and what is fading. “We try to adapt. If certain programs aren’t popular, we seek input on other programs they might want.” They had 14 soccer teams last year and are trying to grow that program. They do Saturday Morning Sports at schools throughout the district, offering T-ball, basketball, flag football and soccer. The department even has a golf simulator league and does golf simulator rentals. Access programs for those with disabilities also are offered, such as the adaptive ski program. Hoscheit said having enough available gym space and outdoor field space is always a challenge. “Luckily, being part of Mankato Area Public Schools we have priority over other rental user groups, if there’s not school

activities going on,” he said. “In summer we don’t have our own facilities, so we have to adjust with what’s going on a parks or at Caswell. We work with both cities to improve existing facilities and look for potential growth.” The community rec department is also seeing a big uptick in the latest craze: pickleball. “Pickleball membership is huge.”

Pickleball mania

When the Pickleball Association started a few years ago, there were just 20 members. Today, Sandr y said, they have 175 members and many more people who play. “It’s the fastest-growing sport in America. It started 52 years ago, but in the last 10 years it’s just exploded.” The association members can be found Mondays-Saturdays during the summer at Tourtellotte, where up to 60 members play and non-members show up to try it out. They have morning and evening sessions. There are also pickleball courts at the YMCA, Prairie Winds school and Lincoln Community Center. “We need more indoor courts people can use every day without membership — a pay-as-you-play system.” Sandry said about 80 percent of

Top right: Mason Nessler, 4, is chased down the third base line towards home plate by Scott Nessler before a softball game began at Jaycee Park. Bottom right: Jamie Como (center) and his Big Dog teammates get warmed up before a softball game at Jaycee Park. Photos by Jackson Forderer their members are senior citizens. He said seniors usually play in the morning with younger people playing after the workday is over. The association charges $20 a year and provides balls for members and they have extra paddles for people who want to try it out. The benefits of pickleball, he said, are many. “It’s healthy, it can help you live in your own home longer. We have people with new knees who play. You play as hard or easy as you want. Everybody, and I mean everybody, can play.” And he said the cost is minimal — about $50 to $60 for a good paddle.

Play it Again Sports

Oberle said the shop is all about hockey during the winter season. “Hockey is our biggest thing. We carry pretty much everything for hockey. We’re more new stock than used.” They also do skate sharpening and skate service work. “It gains us a lot of traffic,” Oberle said. “Competitive hockey players probably sharpen them once or twice a week. Recreational skaters maybe a couple of times a year.” Skates and sticks are the biggest sellers and can be the most costly. “Skates run from $50 to $800 or more. Sticks are $20 to $300.

MN Valley Business • JULY 2019 • 11

Top: From left, Andy Oberle, Dave Connor and Steve Eckers of Play It Again Sports. Photo by Pat Christman

“The goalie stuff, especially for high school kids, it can be a couple of thousand dollars for the latest and greatest leg pads.” “The goalie stuff, especially for high school kids, it can be a couple of thousand dollars for the latest and greatest leg pads.” After hockey, baseball and softball gear are their biggest sellers. “And there’s golf, roller blades, inline skates, lacrosse and pickleball.” Play it Again Sports spends a lot of time establishing relationships with youth organizations thr ough sponsorships and selling equipment at discounted rates. He said they’re always looking for more pre-owned gear, especially ball gloves and skates. “We never have enough used equipment. There’s a big demand for used, and that’s our niche.” MV

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Mike and Pat Redig with son Todd.

Right at home

Nordaas American Homes celebrates 70 years By Dan Greenwood Photos by Pat Christman

osh Miller, a drafter designer of new years, has remained ahead of the curve in construction with Nordaas American an industry that fluctuates from external Homes, led a tour through every room factors like the economy and changing of a custom-built house, regulations. pointing out cabinets, “When I started, tables and furniture everything was a flat before soaking up the quar ter-inch line tranquil view of the drawing and blueprints,” NORDAAS AMERICAN said owner Michael countryside from one HOMES the windows. Redig. “Now everything nordaashomes.com But this house has yet is computer drafted. 10091 Highway 22 to be physically built. They’ve gone as far as Thanks to virtual adding virtual reality; Minnesota Lake reality, it’s one example you can put your 507-462-3331 of how this Minnesota headsets on, go through, Lake company, which is celebrating 70 around and over your house.”

Cover Spotlight

14 • JULY 2019 • MN Valley Business

Nordaas has all manner of home interior items on hand. Haakon Nordaas, a Norweigan immigrant who founded the company in 1949, hired Michael Redig in 1972 as a sales representative. In 1989, when Nordaas decided to retire, Michael Redig and his wife Pat purchased the business. Now with a staff of 21, they have sales reps covering territory in half a dozen states throughout the upper Midwest. Their retail showroom in Minnesota Lake is full of every imaginable feature a new homeowner would want, from flooring, furnishings and décor to fireplaces and countertops. Next door is the lumber yard; and nearby they give prospective clients a tour of one of the homes they built. “People come from out of state and we have a guest house they can stay in,” Pat Redig said. “Then they can tour a Nordaas home.” Their son, Todd Redig, worked in the lumber yard when he was in high school. After college, he became a sales rep for eastern Iowa. The three together are owners, and he’ll acquire the

company when his parents retire. “I’d like to see it make 100 years,” Michael Redig said. “And he’s got three little guys.” While some customers have a clear-cut idea of what they are looking for in a custom built home, others are starting from scratch. When clients come to visit Minnesota Lake, the first thing Todd Redig does is bring them through the showroom, lumber yard and then a model house that his parents also happen to live in. “It’s an extension of our showroom, but they live in it so they have to clean it every single day,” Todd Redig said with a laugh.

Start to finish

The process, which begins with financing, design and ultimately construction, can take several months to several years. To illustrate the differences, he explains how they are working on a small 900 square foot cabin on one end of the spectrum, but they are also working on a 9,000 square foot mansion. It all just depends

on the customer. “Some clients want to do it all,” Todd Rediq said. “They want to frame it, they’ve got their brother to do the shingling and a friend to do the siding. We give the homeowner that flexibility. If they want to be actively involved with the project, go for it. We’ll do the supplies and the design. Then you have another customer over here that doesn’t recognize what a hammer is. They need a lot of assistance. It varies on the customer and the project.” The modern farmhouse look is increasingly popular, with white siding colors complemented with dark colors for the trims and roof. Energy efficient windows, doors heating and cooling systems are also frequent requests, as is making homes handicapped accessible. Word of mouth and referrals play a big role in their success, but the family said hiring young, computer savvy designers plucked right out of college have given them an edge with tailoring design to the customers. It all begins with concept sketches and

MN Valley Business • JULY 2019 • 15

flat line drawings, followed by 3D design. Customers put on headsets and can get a feel for what the house would look like up to scale, allowing dimensional changes and altering the placement of windows and doors as they go. By the time construction begins, customers know exactly what they are getting. “They’re putting furniture in, lighting in, the cabinet schedule in,” Todd Redig said. “So you literally are walking through the house and getting a sense of what a king-size bed and two night stands is going to feel like in this 14-by-15 foot bedroom. You get to make any of these modifications or tweaks before we’ve even started construction.” Todd Redig said diversification has played a significant role in keeping the business profitable even during challenges like the housing boom and bust between the mid 2000’s to 2012. While Redigs weathered the storm, competitors folded after building homes before they were bought. By spreading out the business

Drafter Josh Miller works on a design at Nordaas American Homes. beyond design and construction to include remodeling existing houses and retail at the showroom and lumber yard has been instrumental in their success. They say every year brings new challenges and rewards. “It changes every single year,” Todd Redig said. “Maybe one year our new construction and

16 • JULY 2019 • MN Valley Business

new home builds are down but our remodels and renovation side of the business are up. It’s been nice a nice little blend that way to carry us through these ups and downs.” MV

MN Valley Business • JULY 2019 • 17

The Mosquito Squad’s Zach Zink sprays for mosquitoes under a deck in North Mankato.

Catching the Bug

Mankato man finds nuisance, then opportunity, in mosquitoes By Dan Linehan | Photos by Pat Christman

hen Jason Quint and his “I probably was 10 times more wife, Heather, moved to a thorough than I had to be,” he new country home outside says. “That cost me money but Mankato a few years ago, they were they saw that and referred their ready to enjoy the wide open spaces. MANKATO MOSQUITO friends.” But they hadn’t factored in the In the years since, the couple and SQUAD mosquitoes ready to enjoy them. their staff have learned where to mosquitosquad.com As they explored ways to curb the focus, but finding mosquitoes and 507-320-3223 bugs, the Quints stumbled across a the places they breed can be tricky. business opportunity. Experience A female needs only a bottle cap told them there was a healthy demand, and they full of water to lay 300 eggs, Quint says. figured they could do a better job than the existing From his perspective, the real challenge wasn’t pest-control companies. finding those eggs or even the mosquitoes. It was He always wanted to start a business and the couple finding the right people. found an opportunity with a franchise called Mosquito Squad. The Richmond, Va., company opened in 2004 A Staffing Buzzkill and has about 220 franchisees. Quint kept his day job after starting the business, and it soon grew to the point where he could no longer He didn’t have any pest control experience — he service his customers on evenings and weekends. works as an engineer — but says he was trained well Finding the right employees wasn’t easy. by the company. Still, he remembers being nervous on “It was a helluva lot more challenging than I his first job two years ago.

18 • JULY 2019 • MN Valley Business

Profile

The adults are a little trickier. The company sprays decks, trees and other surfaces mosquitoes might land on. The chemical kills mosquitoes when they land on the treated surface for between two and three weeks after it’s applied, he said. This is why the company returns to customers’ properties every three weeks throughout mosquito season. They can’t promise to kill every single bug, but Quint says their main chemical gets rid of between 85 percent and 90 percent of mosquitoes. Mosquito Squad has some tips to help people cut down on mosquitoes: • Get rid of standing water, including underneath downspouts, dog bowls and plastic toys. • Talk to your neighbors. A mosquito that hatches next door may not stay there, so coordinate pest control with the people around you. • Remove excess grass, leaves and firewood from your yard.

Effective But Selective

Top: The Mosquito Squad’s Dylan VanDam starts Zach Zink’s sprayer while treating a North Mankato home. Bottom: Anything that can collect water, such as this wheelbarrow, should be overturned to help prevent mosquitoes from breeding. expected,” he says. “When you do a job you know whether it’s done right, but when you’re hiring people you’re training them to do it as you would want it done.” When a business is in its infancy, even a small number of mistakes can kill it. Leaving the bugs alive is a problem, but a bigger one is disappointing a customer. “They’re not rolling up with music blaring or looking sloppy,” he says of his employees. “It’s a tough job, so I find a younger demographic can be good workers, but I have to make sure they assume somebody is watching at all times.” Referrals are their No. 1 source of new customers, so keeping existing customers happy is vital. Of course, they also have to kill the bugs.

Think Like a Mosquito

As frail as a mosquito is, their eggs are hardy. They can last through the winter and the larvae — wriggly, tiny worms — hatch as the spring rains begin. They can go from just-hatched larva to biting fly in a week. Mosquito control companies have to kill both larval and adult mosquitoes. Like many others, Quint’s company kills the little worms with even tinier bugs — a naturally occurring soil bacterium. They treat any area of standing water, no matter how small.

It’s a natural question for customers and their neighbors: What chemical are you spraying, and how might it affect my family and pets? Quint’s company typically uses an artificial chemical of the pyrethroid family. It’s a derivative of chrysanthemum flowers. His staff ensures that children and pets are not outdoors during spraying, in part to avoid workers from being bitten by dogs. After the chemical dries, it is safe for kids and pets, he said. The chemical can be toxic to bees, so Quint’s company doesn’t treat blooming flowers, he said. “I have bees on my property, and I don’t treat anywhere they’re going to be foraging for pollen,” he said. “We want to be good stewards of the environment.” The Environmental Protection Agency says pyrethroids “do not pose risk concerns for children or adults.” Quint says that’s true as long as the chemical is applied according to its label and allowed to dry. “It’s no different than the household cleaners you have in your house,” he says. “You have to be conscious of what you’re doing.” The company also has an all-natural chemical option, though it is a little less effective. Quint says it gets rid of about 80 percent of mosquitoes. “We treat a lot of daycares with that,” he says.

Tr ying to Grow

When he acquired the franchise, Quint bought the right to be the sole Mosquito Squad operator in southwest Minnesota, from South Dakota to Albert Lea. But it’s not profitable to service far-flung cities; the business tends to stay within an hour of Mankato. “Driving is a killer on costs,” Quint says. He said the company is focused on doing a good job with existing customers — retention from year to year is critical — and finding new ones. Meanwhile, Quint has kept his day job as an engineer. He typically rises at about 4:30 a.m. and works on Mosquito Squad business before going to work. “Yeah, it’s a challenge.” MV

MN Valley Business • JULY 2019 • 19

Greg Bednar, owner of Greg’s Champion Auto in Mankato.

Champion entrepreneur Bednar found keys to success to grow Champion Auto By Dan Greenwood Photos by Pat Christman and he said, ‘not what I expected.’ When a person walks through the door of It’s one example of how owner Bednar Greg’s Champion Auto in Mankato, they are strives to set himself apart from competitors met with a friendly greeting amidst a living in the auto repair room atmosphere of business. This spring, he plush couches and chairs, was recognized as Encore complimentar y drinks Entrepreneur of the Year and magazines on the by the Small Business coffee table. GREG’S “A guy walked in here Development Center. The CHAMPION AUTO annual award is given to recently and did a double gregschampionauto.com people who started and take,” owner Greg Bednar 55 Star St., Mankato recalled. “The guy said, grew a business after the 507-344-3300 ‘Is this an auto repair age of 50. place?’ We said, ‘yes it is,’ “I was 53 years old when

Feature

20 • JULY 2019 • MN Valley Business

I bought the shop,” Bednar said. “Quite a few people have stopped and said congratulations.” Prior to opening the auto repair shop in 2010, Bednar had a decades-long career in telecommunications, software development and more recently, professional fundraising at South Central College and Minnesota State University. But throughout his life, his passion has been cars. Growing up working on them with his dad and brothers, he discovered he had a mechanical aptitude for fixing them. In his office there is a giant framed photograph of a 1972 Dodge Charger that he drives in drag races during the summer months around Minnesota and Iowa, a hobby he immediately fell in love with when he first raced 20 years ago. In 2010, Dan Robinson, owner of Dan’s Champion Auto, approached Bednar at a fundraiser for South Central College. Robinson wanted to retire and suggested Bednar buy the shop from him. “That really put a bee in my bonnet,” Bednar said. “I’ve toyed with the idea of wanting to own my own business several times. The older I got the more I realized, I can do that.”

Turnaround

When Greg’s Champion Auto first opened at the same location at 55 Star St in Mankato, business was slow. For most of the day, Bednar and his two mechanics at the time sat around looking at each other or watching television. Bednar was determined to turn that around, and it began with a magazine article he read about the top 10 independent auto repair shops in the country, one of which was in Roseville. He called Rich Fearing, the owner of Village Auto Works and asked him one question; what was Fearing doing that Bednar wasn’t and could he come up and shadow him? Fearing told him to come on up for a day. “So I went up and shadowed him for a day and he opened up his books,” Bednar said. “He bared his soul.” Fearing was a member of a 20 Group, where like-minded

business owners get together and examine their best practices, deciphering what approaches work and what doesn’t. When Bednar returned to Mankato, he applied and was accepted to one of the premier organizations in the country called the Bottom Line Impact Groups. “We would get together every four months and we would share best practices and open our books,” Bednar said. “We basically did an audit on each other’s operation. My promotion and my advertising was kind of a patchwork of things. They said to stop all that. There’s one thing that works and it works like magic and that’s direct mail. So I threw all in based on their input.” He started mailing coupons, rotating throughout different parts of Mankato. Pretty soon people began showing up with the coupons. The next step was ensuring that those people would be repeat customers. Working with the 20 Group helped him to crunch and interpret the numbers. When he learned that 70 percent of his customers were women, he hired a designer to help revamp the reception area, including reception desks and back lighting sourced from a spa. “It was right around Thanksgiving of 2016 when we finished,” Bednar said. “When I bought the place this was just a big white box with some fairly comfortable seating, but you couldn’t make eye contact with your customers the way it was configured.” Bednar also focused on honesty and ethics, hiring people who also held those attributes and clearly explaining what repairs are needed, and what repairs can

wait. That’s a big reason Ryan MacPherson, a professor at Bethany Lutheran College, is a loyal and repeat customer. “I like to know what isn’t working and what should we do about it,” MacPherson said. “Sometimes there’s more than one option, you can repair all of it or part of it, so they’re always patient and they talk it through with me. They’re willing to slow down and explain things. The thing with Greg that always impresses me is that he’s cheerful and the people who work with him, you can tell they have admiration and respect for him.” As Bednar refurbished the shop and acquired customers, his staff grew to eight full time and several part time employees. He learned the best way to acquire and retain talent, especially when auto mechanics of today have morphed into what he says is 70 percent mechanic and 30 percent computer tech as cars are made with built-in computers. He didn’t want the type of employee that would work for two years and leave, so he offers benefits like health care, a 401K, paid days off and vacation time; the kind of benefit package found in larger companies. But Bednar knew if he wanted career technicians, he had to treat them as career employees. After nine years at the helm and rapid growth, Bednar said he’s finally reached a level of balance and sustainability, all while keeping the customers and his own employees happy. “Now we’re growing at a nice healthy seven to eight percent a year and that’s a sustainable business.” MV

MN Valley Business • JULY 2019 • 21

wo pen in e ag le l ake

Bob Beadell

We’re not just your bank

Community Bank has a long history of serving the communities that we call home and we are committed to being your very best neighbor. We’re pleased to call Greater Mankato home.

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Architecture + Engineering + Environmental + Planning

22 • JULY 2019 • MN Valley Business

www.ISGInc.com

Business and Industry Trends ■

Energy Four states account for over ½ of wind power

In the United States, producers generated 275 million megawatthours of electricity from wind power in 2018. Of that, more than half came from just four states: Texas, Oklahoma, Iowa, and Kansas. Five other states— California, Illinois, Minnesota, North Dakota, and Colorado— provided another 20% of total wind generation in the country. Texas has accounted for over 25% of U.S. wind electricity generation in each of the past three years. Most wind generating capacity in Texas is located in the rural northern and western areas of the state. The Public Utility Commission of Texas authorized a series of transmission expansion projects in 2008 that connected wind generating capacity with population centers in the southern and eastern areas of the state. In 2018, wind provided 16% of total electricity generation in Texas, behind natural gas (50%) and coal (23%). Oklahoma became one of the top four wind generating states in 2013, accounting for just over 10% of total U.S. wind generation in 2018. The state’s wind generating capacity more than doubled between 2014 and 2018. Iowa wind generation has more than doubled since 2011. Over that period, coal-fired generation decreased from a peak of more than 40 million MWh to less than 29 million MWh. Wind provided 34% of total electricity generation in Iowa in 2018, behind natural gas (44%). Kansas became the fourthlargest wind generating state in 2016. Wind turbines accounted

for 36% of the electricity generated in Kansas in 2018, a larger share than any other state, and behind only natural gas’s share of the total at 39%. These states have benefited from having some of the best wind resources in the United States along with relatively low wind farm construction costs.

Crude price jumps

Brent crude oil spot prices averaged $71 per barrel in April, up $5/b from March 2019 and just below the price in April of last year. The Energy Information Administration forecasts Brent spot prices will average $70/b in 2019 and $67/b in 2020, compared with an average of $71/b in 2018. EIA’s higher Brent crude oil price forecast reflects tighter expected global oil market balances in mid-2019 and increasing supply disruption risks globally.

OPEC production falls

EIA forecasts that crude oil production in the Organization of the Petroleum Exporting Countries (OPEC) will average 30.3 million barrels per day (b/d) in 2019, down by 1.7 million b/d from 2018. In 2020, EIA expects OPEC crude oil production to fall by 0.4 million b/d to an average of 29.8 million b/d. Production in Venezuela and Iran account for most of the OPEC output declines in 2019 and in 2020, but EIA expects these declines to be partially offset by production increases from other OPEC members.

Natural gas price down

The Henry Hub natural gas spot price averaged $2.64/million British thermal units in April, down 31 cents/MMBtu from March. Prices fell as a result of warmer-than-normal temperatures across much of the United States, which reduced the use of natural gas for space heating and contributed to above-average inventory injections during the month. EIA expects strong growth in U.S. natural gas production to put downward pressure on prices in 2019 and in 2020. EIA expects Henry Hub natural gas

Renewables at 18%

EIA forecasts that all renewable fuels, including wind, solar, and hydropower, will produce 18% of U.S. electricity in 2019 and almost 20% in 2020. Wind generation will surpass hydropower generation for the first time to become the leading source of renewable electricity generation in 2019 and maintain that position in 2020.

CO2 emissions fall

After rising by 2.7% in 2018, EIA forecasts that U.S. energy-related carbon dioxide (CO2) emissions will decline by 2.1% in 2019 and by 0.8% in 2020. EIA expects emissions to fall in 2019 and in 2020 as forecast temperatures return to near normal after a warm summer and cold winter in 2018 and because the forecast share of electricity generated from natural gas and renewables increases while the forecast share generated from coal, which produces more CO2 emissions, decreases. Energy-related CO2 emissions are sensitive to weather, economic growth, energy prices, and fuel mix.

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2018 - 2019

852 1,156

1500 1200 900 600 300 0

Source: Sales tax figures, City of Mankato Includes restaurants, bars, telecommunications and general merchandise store sales. Excludes most clothing, grocery store sales.

Sales tax collections Mankato (In thousands)

- 2018 - 2019 $444 $441

600 500 400 300 200 100 0

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato

- 2018 - 2019

$48,807

70000

$51,683

52500 35000 17500 0

Source: City of Mankato

Mankato food and beverage tax - 2018 - 2019 175000 140000

$66,400 $70,964

105000 70000 35000 0

Source: City of Mankato

C. Sankey

MN Valley Business • JULY 2019 • 23

■

Agricultural Outlook

By Kent Thiesse

New federal dair y program offers hope

he financial struggles of family dairy farms in recent years across Minnesota, Wisconsin, and other States has been well documented. There has been a large loss of dairy operations in these regions of the U.S. in the past few years, due to the ongoing economic challenges in the dairy industry. The 2018 Farm Bill created the Dairy Margin Coverage (DMC) program as a safety-net program for dairy producers for 2019-2023, which may offer some hope in the future for the small -to-medium size dairy producers. Sign-up for the new Dairy Margin Coverage (DMC) program began on June 17 and will continue until September 30, 2019 at local FSA offices. DMC payments are scheduled to begin after July 8, 2019, and DMC payments to eligible dairy producers will be made retroactively back to January 1, 2019. The DMC program is a voluntary program, which is “margin based” with calculations based on the income over feed cost margins on a monthly basis. The DMC program requires dair y producers to choose production and price coverage levels at various premium rates. There were some fairly significant improvements in the DMC program as a “safety-net” and risk management program for dairy producers, in comparison to the previous Market Protection Program (MPP) in the 2014 Farm Bill. There is especially enhanced risk protection for those producers for smaller-sized dairy herds under 250 cows; however, the new DMC program also provides more flexibility for larger dairy operations as well.

Following are highlights of the new DMC program (compared to the previous MPP program): • Dairy producers now have a coverage level choice up to 95 percent of production history. (MPP maximum coverage level was capped at 90 percent of production history.) • Three new Tier 1 price coverage levels of $8.50/ cwt., $9.00/cwt., and $9.50/cwt. (MPP top price coverage level was $8.00/cwt.) • Tier 1 DMC coverage goes up to 5 million pounds of production (approx. 200-230 cows). (MPP Tier 1 maximum was 4 million pounds.) • Provides a 25 percent premium discount for dairy producers that make a one-time 5-year (2019-2023) enrollment into the DMC program. No premium repayment required if producers exit the business early. • DMC premiums are more affordable than with the original MPP. Producers can purchase the $9.50/ cwt. coverage for an annual premium of $.15/cwt., which is reduced to $.1125/cwt. when utilizing the premium discount. The DMC premium for $8.00/

24 • JULY 2019 • MN Valley Business

cwt. coverage is $.10/cwt., or $.075/cwt. with the premium discount. (The $8.00/cwt. coverage under the MPP program had a premium of $.142/cwt.) • Dairy producers may enroll in both the DMC program and either the Livestock Gross Margin (LGM) or Dairy Revenue Protection (RP) program, which are RMA crop insurance type programs. (With MPP, producers had to choose either MPP or LGM coverage, but could not enroll in both.) The Minnesota DMC Premium Rebate Program The Minnesota Legislature approved legislation, which was signed into law by Governor Tim Walz, to partially rebate dairy producers for the premium costs of the DMC program. The rebate program authorizes up to $8 million to assist Minnesota dairy farmers with the DMC premiums for 2019, the first year of the program. The premium rebate program will cover the first 5 million pounds of historical annual milk production (Tier 1 coverage) and will be capped at $9,000 per farm. Dairy farms with annual production above 16 million pounds (approx. 750 cows) will not be eligible for the rebate program. It is estimated that about 98% of Minnesota dairy farms will be eligible for the rebate program. In order to be eligible for the rebate, dairy producers must sign-up for all 5 years of the DMC program (through 2023) at their local FSA office, and must provide proof of sign-up with their rebate application. Impacts of the Higher Tier 1 Price Coverage Under MPP, many dairy producers selected Tier 1 coverage at either the $6.50 or $8.00 per hundredweight coverage levels for 2015 to 2018. Based on USDA data, MPP payments only occurred in 4 percent of the months during that time period at the $6.50/cwt., and in 41 percent of the months at the $8.00/cwt. level. The DMC program now offers higher price coverage level options of $8.50, $9.00, and $9.50 per hundredweight. Had the DMC program been in place from 2015 to 2018, DMC payments would have occurred in 52 percent of the months at $8.50/cwt.; 63 percent at $9.00/cwt.; and 80 percent of the months at $9.50/cwt. The maximum DMC coverage price is $9.50 per hundredweight, which is 117 percent above average MPP/DMC margin over the past ten years of $8.11 per hundredweight. The average MPP/DMC margin over the past five years has been $9.51 per hundredweight, which correlates to the new maximum DMC price coverage level. It should be noted that the 5-year average was more impacted by the record high margin level in 2014. Past price margins are not

necessarily a predictor of future DMC program payments; however, based on current trends in the margins, the $9.50 per hundredweight level should provide a considerably improved safety-net. Preliminar y 2019 DMC Results As was mentioned earlier, the 2019 DMC payments will be retroactive back to January 1, 2019, once they begin in July of 2019. The DMC payments are calculated on a monthly basis, so we already have the results for January, February, and March of 2019. Based on the DMC income over feed cost formula, the DMC payments for the first three months of 2019 would be as follows: • January = $1.51 per cwt. • February = $1.28 per cwt. • March = $ .65 per cwt. Example …… n Dairy herd producing approx. 3 million pounds per year (30,000 cwt.), or 2,500 cwt. per month. (equates to a dairy herd of approx. 125 cows.) n DMC payment formula = Monthly Payment Rate x % Coverage x Monthly Ave. Production 8 (Example = $1.51/cwt. x 2,500 cwt. x 95% (.95) = $3,586.25 DMC payment) 6 n Estimated 2019 DMC payments for the example herd (3 million pounds annual production): 4 January = $3,586.25 February = $3,040.00 2 March = $1,543.75 TOTAL = $8,170.00 (for first 3 months of 2019) Note 0 --- DMC payments will be subject to a Federal J F M A M J J A S O N D sequestration payment reduction of 6.2 percent. n DMC Premium Formula = Annual Production x % Coverage x Premium Rate (Example = 30,000 cwt. x .95 (28,500 cwt.) x $.15/ 8 cwt. = $4,275 Annual DMC Premium) 100 Notes 6 --- There is a 25 percent premium reduction for 85 5-year DMC enrollment. MN 4dairy producers are also eligible for the special 70 premium rebate program. DMC 2

55 Bottom-Line on the New DMC Program The40 combination of the enhanced price risk 0 F M Aunder M the J new J A DMC S Oprogram, N D protectionJ available along25 with the added DMC premium incentives, make J F M A M J J A S O N D enrollment in the DMC program for 2019-2023 almost a “no-brainer” for small to medium sized dairy farms that plan to continue in operation. This decision is further strengthened by the fact that the announced DMC100 payment levels for the first three months (Jan., Feb. & March) of 2019 will be more than double the 85 2019 premium levels for entire 2019 year. Of course, many 70 Minnesota dairy farmers may have very little 2019 DMC premiums, due to the State’s premium rebate55program. It’s hard to predict what will happen to dairy prices and margins for the entire 5-year period 40 2023) of the DMC program, but “out of the (through gate”, 25 the DMC program looks like a greatly improved J F M J producers. J A S O N D risk management toolAfor Mdairy Kent Thiesse is farm management analyst and senior vice president, MinnStar Bank, Lake Crystal. 507-381-7960); kent.thiesse@minnstarbank.com

Agriculture/ Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2018 — 2019

8 6

$3.54

2 0

$3.28

Source: USDA

Soybean prices — southern Minnesota

(dollars per bushel)

— 2018 — 2019 8 20 100 16 6 85 $9.46 12 470 8 255 $7.18 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

— 2018 — 2019

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

$82.89

22 19 16

$61.56 A M J J A M J J A M J J

M M M

Milk prices

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

Minimum prices, class 1 milk Dollars per hundredweight

— 2018 — 2019 25 22

$16.38

19 16 13 10

$14.03 J

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

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

C. Sankey

MN Valley Business • JULY 2019 • 25

Construction/Real Estate Residential building permits Mankato - 2018 - 2019 (in thousands) $16,705

Commercial building permits Mankato - 2018 - 2019 (in thousands) $11,751

$1,959,312

5000000

10,000,000

4000000

8,000,000

3000000

6,000,000

2000000

4,000,000

1000000 0

2,000,000 J

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

Existing home sales: Mankato region - 2018 - 2019 (in thousands) 145 300

211

Median home sale price: Mankato region - 2018 - 2019 (in thousands)

250

$180,00 $186,800

200

240

150

180

100

120

0 J

Source: Realtors Association of Southern Minnesota

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

Housing starts: Mankato/North Mankato

— 2018 — 2019

- 2018 - 2019

5.5

4.6%

5.0

Source: Realtor Association of Southern Minnesota

Interest Rates: 30-year fixed-rate mortgage

4.5

4.0

3.5 3.0

Source: City of Mankato

$11,900,869

12,000,000

3.8% J

10 A

Source: Freddie Mac

Read us online!

Source: Cities of Mankato/North Mankato

Trust our team to be there for your team when you need us most. www.schwickerts.com | 507-387-3101 | 330 Poplar St. Mankato, MN

26 • JULY 2019 • MN Valley Business

Gas Prices 5

Gas prices-Mankato

— 2018 — 2019

54 43 $2.70

32 21 10 0

$2.58

$39.78

-6.5%

Ameriprise

$142.83

$150.23

+5.2%

Best Buy

$72.29

$63.85

-11.7%

Brookfield Property

$19.93

$19.22

-3.6%

Crown Cork & Seal

$59.05

$59.70

+1.1%

Consolidated Comm.

$4.97

$4.16

-17.3%

Fastenal

$32.87

$32.38

-1.5%

General Mills

$51.41

$51.83

+0.8%

Itron

$61.01

$58.92

-3.4%

Johnson Outdoors

$82.55

$75.32

-8.8%

$175.28

$166.85

-4.8%

Target

$75.11

$86.86

+15.6%

U.S. Bancorp

$52.12

$52.62

+1.0%

Winland

$1.05

$1.20

+14.3%

Xcel

$56.06

$59.68

+6.5%

$2.60

21 M

$42.56

$2.79

Archer Daniels

Percent change

June 7

— 2018 — 2019

May 10

Gas prices-Minnesota

Stocks of local interest

0Source: GasBuddy.com J F M A

C. Sankey

MN Valley Business • JULY 2019 • 27

Minnesota Business Updates

■

■ ADM consolidating

■ CBD oil sales soar

Global grains trader Archer Daniels Midland said it will consolidate five business units into four in the company’s second reorganization in just over a year as adverse weather and a U.S.-China trade dispute threaten profits. ADM will combine its grain trading and oilseeds segments into a new business unit called Ag Services & Oilseeds, in a move that analysts say could better streamline its North American operations and cut costs. ADM has an oilseed plant in Mankato. The revamp comes during a particularly challenging period for grain merchants ADM and rivals Bunge Ltd, Cargill Inc and Louis Dreyfus Co, known as the ABCD quartet that dominates global agricultural commodities trade. The companies have shifted operations and reorganized management teams as profits have been squeezed by a global grains glut, low crop prices and a prolonged U.S.-China trade war that has stifled global commodities flows. Severe weather in North America has heaped further pressure on the sector, including exceptionally harsh cold this winter and record-breaking spring floods that combined to cut ADM’s first quarter operating profit by $50-$60 million.

New data shows that a majority of Americans support marijuana legalization for personal use (56%) and even more support using it for medical purposes (80%). That overwhelming positivity may explain why, CBD, a marijuana derivative with no psychoactive properties, took the wellness industry by storm in 2018. The drug, which is sold over the counter, is mentioned as a salve for a suite of ailments, from PTSD to anxiety to pain relief. CBD sales topped $375 million in 2018. It’s no wonder major retailers like CVS, Walgreens and Target are getting in on the CBD action because there’s a lot of money to be made, and each of these three retailers has either started selling CBD (CVS and Walgreens) or plan to this year (Target).

■ Best Buy’s resiliency Amazon may be the dominant player in the e-commerce market, but traditional brick-and-mortar retailers like Best Buy continue to adjust their business models to meet consumers’ expectations and ramp up the competition with the Big Tech giant. In fact, Best Buy also managed to mitigate the effects

Employment/Unemployment Initial unemployment claims Nine-county Mankato region Major April Industry 2018 2019 Construction Manufacturing Retail Services Total*

207 135 28 143 513

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

136 132 46 106 420

3500 2800

-34.4% -2.2% -64.3% -25.9% -18.1%

126000

2100 1400

113000

700 100000

Minnesota initial unemployment claims

Minnesota Local non-farm jobs

Major Industry 139000 139000

2018

2019

Percent change ‘17-’18

Construction 126000 126000 Manufacturing Retail 113000 Services 113000 Total*

4,038 1,491 886 3,805 10,024

3,246 1,641 919 3,604 9,188

-19.6% +10.1% +3.7% -5.3% -8.3%

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

28 • JULY 2019 • MN Valley Business

135,953 129,634

139000

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

April

- 2018 - 2019

Nine-county Mankato region

(in thousands)

200000 150000 100000

2000 1400 1400

700 D

50000

700 0

- 2018 - 2019

3,005 2,939

8000 3500 3500 6000 2800 2800 4000 2100 2100

F M

M A A M

M J

J J

J A

A S

S O

O N

N D

of tariffs on consumer technology goods, and turned a profit in the first quarter of its 2020 fiscal year despite doomsday predictions that Amazon’s market dominance and the tariffs would create the perfect storm to sink the tech retailer, according to Insidesources.com. As retail and supply chain executives discussed at a retail supply chain conference last year, traditional brick-and-mortar retailers need to start thinking about retail as a service for consumers — because what consumers want and expect from the shopping experience changes rapidly and hinges on convenience and low prices. According to Best Buy CEO Hubert Joly, the “essence” of Best Buy’s business strategy is “the opportunity to deepen the relationships with our customers.”

amount it pays to obtain the deposits, so lower long term rates would squeeze those profits. Wall Street trading, which can increase when the stock market is more volatile, is also fluctuating.

■ General Mills, Godiva partner Godiva Chocolatier has partnered with General Mills to develop a new range of baking mixes. 139000 With the product launch, Godiva is expanding its footprint 126000 into the baking aisle, incorporating the brand’s signature chocolate into baking mixes. Available in four options – molten lava cakes, brownie cheesecake swirl, raspberry chocolate torte and flourless 113000 chocolate torte – the baking mixes each feature 72% dark Godiva chocolate.

■ Trade war hits banks A prolonged trade dispute with China could spell trouble for American banks as decreased trading volumes in securities and low-interest rates put pressure on earnings. Some experts are now predicting the Federal Reserve will seek to cut interest rates in 2019, a move urged by White House 139000 allies that could further weigh on profits at 139000financial institutions. large The central bank has indicated it will keep rates 126000 steady, but even the status quo could be a drag on bank 126000 profitability. Most lenders earn a significant portion of their revenue from net interest margins, or the difference 113000 between how much banks charge for a loan and the 113000

100000

100000 J F

J M

M J

J A

J S

2800 2100 1400

4000 2100 1400 2000

A O

S N

O D

4,577 4,677

6000

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

200000

J A A

J S S

A S O N O N D O N D

100000 50000 0

2100 1400 700 0

150000

4000 1400

100000

700 2000

50000

0 0 J F JM

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

April

100000

0 F

200000

J M

F M A A M J

M J

J A

2018

2019

2.5% 60,672 1,888

2.6% 62,140 1,617

J S

A O

S N

O D

Unemployment rates Counties, state, nation County/area

- 2018 - 2019

96,201 98,830

150000

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

100000

2000 0 F F

2800

Mankato/North Mankato Metropolitan statistical area

150000

4000

700 0 J 0 J

D 0

200000

Minnesota number of unemployed

- 2018 - 2019

Nine-county Mankato region 8000

Employment/Unemployment

F M A A M J

Local number of unemployed 8000 3500 6000 2800

3500 8000 2800 6000 2100

3500

700

100000

3500

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

April 2018

April 2019

2.5% 3.8% 4.0% 6.2% 3.1% 2.2% 3.4% 4.6% 3.6% 2.3% 3.0% 3.7%

2.7% 3.7% 4.6% 5.4% 3.4% 2.4% 4.0% 3.8% 4.2% 2.8% 3.2% 3.3%

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

MN Valley Business • JULY 2019 • 29

Sponsored by the Carl & Verna Schmidt Foundation

After market’s 10-year run, is it time to reassess investment strategy? By Janet Kidd Stewart | Tribune News Service

etirement account balances cruised to record levels in the decade since the Great Recession’s market bottom, which is great news if you’re seventysomething and less so if you’re younger. People about to retire could be positioned for disaster if the long bull market ushers in big losses in those critical first few years of portfolio drawdowns. Their kids, meanwhile, have been paying ever-rising prices for the stocks in their 401(k) plans over the last 10 years. “It’s only reasonable to start preparing, both mentally and financially, for a market that goes down and stays down. And goes down some more,” Christine Benz, personal finance director for Morningstar, warned recently. Or as her podcast guest, author and investment firm founder William Bernstein, said: “If you’ve won the game, stop playing.” Benz advises retirees to commit two years’ worth of retirement income to cash, another eight years to bonds and the remainder to stock holdings. To further cushion the nest egg, she recently suggested that retirees double-check their stock holdings to make sure they are diversified across different asset classes and to consider some so-called low-volatility investments, such as exchange-traded funds focusing on companies with strong dividend track records. Not everyone agrees bonds are safe given a generally rising interest rate environment, but the current pause on rate hikes and overall economic sentiment is creating some attractive yield on high quality, shortterm bonds, investment experts say. Even high-yield savings accounts are paying more than 2.3 percent, according to Bankrate.com. Your own best strategy will vary widely depending on how much growth you need from your retirement savings, among other factors, but the sentiment about being aware of how much risk you are carrying is particularly important now. Nearly 22% of employees in workplace savings plans are invested too aggressively, a recent Fidelity Investments report found. And among the generations, baby boomers are the most likely to have too much invested in higher-risk securities, Fidelity said. About 8% of Boomer retirement accounts are 100% invested in stocks, said Meghan Murphy, a Fidelity vice president. Across all ages, about 14% are over-

30 • JULY 2019 • MN Valley Business

allocated to stocks, she said. There are a couple of caveats. The Fidelity report couldn’t discern investors’ overall holdings, so some of those 100-percent stock 401(k) accounts might be balanced by more conservative IRAs or a spouse’s workplace plan, for example. Savers should also be aware that much of the investment risk in today’s retirement plans is driven by the huge flow of assets into target-date mutual funds that automatically rebalance their mix of stocks and bonds. That can keep investors from becoming overly invested in stocks during big bull-market runs, but they need to understand there is a fairly significant difference in the risk profiles among these funds. A recent Morningstar report points out that while American Funds and T. Rowe Price have similar overall stock/bond mixes among their target-date funds, American Funds held more U.S. stocks as opposed to international ones, compared with T. Rowe. These sub-categories matter over time. Overall, though, the Fidelity report shows that for people who have access to a workplace retirement plan, the numbers are getting better: -Total savings rates - employees’ and employers’ contributions combined - reached 13.5% in the first three months of 2019. -Boomers’ average balances grew to $357,200, an increase of 367% in the decade since the market bottom in 2009. Two-thirds of that gain was due to market performance. -Gen X savers accrued an average balance of $268,900, up 626 percent, with 57% of the gain attributed to market performance vs. contributions. -The average millennial account grew to $129,800, driven mostly by contributions. Concerned about measuring up? Think about your own savings as a multiple of your income. Fidelity suggests saving three times your current income by age 40 and 10 times income by age 67, though these are very rough guidelines. Doctors and other workers with long education paths or lower-income workers whose retirement income will be covered mostly by Social Security will have different paths. MV

Sponsored by the Carl & Verna Schmidt Foundation

Vanguard issues its 10-year forecast for stock, bond market returns

By Erin Arvedlund | The Philadelphia Inquirer

anguard released its 10-year projected returns for stock and bond markets, an eagerly awaited piece of research out of the world’s largest mutual fund firm with over $5 trillion in assets. Vanguard published a range of annual market returns the firm forecast for the next 10 years: U.S. equity returns: 4% – 6% U.S. aggregate bond returns: 2.5% – 4.5% International equities returns: 7.5% – 9.5% International bond returns (hedged): 2% – 4% Vanguard’s annual market forecasts are “nominal” returns, meaning they don’t account for inflation. Assuming 2% annual inflation would lower those forecasts by the same amount; for example, equity returns after inflation, or “real” returns, would be 2 to 4% annually. Vanguard also said it sees no imminent recession threat, and said the U.S. economy is currently in the mid- to late-stages of the business cycle. The firm predicts a 35% chance of a recession in the next 12 months. As for the bond markets, Vanguard noted that the yield curve (as traditionally defined by the 3-month and 10-year U.S. Treasury) briefly inverted in late March. Some market watchers say that an inverted yield curve is a predictor of recession. But “a key distinction about this inversion compared with others is it’s driven almost exclusively by longterm rates dropping below short-term rates,” Vanguard wrote in its forecast report. “We see little evidence that the inversion, in isolation, is signaling a recession in 2019/early 2020.” However, “the expected easing of global growth in the next two years _ driven by a fading boost from U.S. fiscal stimulus and the continued slowing of growth in China _ is fraught with economic and market risks. “ Vanguard believes the U.S. economy can tolerate an

additional interest rate hike, but that “the Federal Reserve has clearly stated its intention of no hikes in 2019. We do not see a valid justification for cutting interest rates as of now, and given our expectation for a modest recovery in the second half of 2019, a cut seems quite unlikely.” Core inflation should remain near or below 2% while an escalation in tariffs would “only temporarily” affect U.S. core inflation. Long term, Vanguard’s 10-year outlook for investment returns “remains guarded, given the backdrop of high valuations and depressed risk-free rates across major markets.” Returns in global equity markets are likely to be about 4.5 to 6.5% for U.S.-dollar-based investors, Vanguard added. Vanguard foresees improving return prospects in non-U.S. developed markets, building on slightly more attractive valuations. U.S. fixed income returns are most likely to be in the 2.5 to 4.5% annual range, driven by rising policy rates and higher yields as central bankers’ policy normalizes, the Malvern, Pa.-based investment giant wrote. Vanguard expects the global economy to continue to grow, albeit at a slightly slower pace, over the next two years. Trade, policy, and financial market uncertainty may prompt growth scares. U.S. economic growth should drop back toward a more sustainable 2% a year as the benefits of expansionary fiscal and monetary policy abate, Vanguard said. China’s growth will remain near 6% a year, with increasing policy stimulus applied to help maintain that trajectory. Vanguard estimates that a “sustained growth-scare scenario in China could have a negative impact on U.S. growth of nearly 30 basis points,” or MV 0.30 percent.

MN Valley Business • JULY 2019 • 31

NEW LOCATION

RIBBON CUTTING

RIBBON CUTTING Community Bank 405 Parkway Avenue, Eagle Lake

BridgeWater 543 Oakwood Drive, Janesville

RIBBON CUTTING

RIBBON CUTTING Kato CBD 111 Star Street, Mankato

NAME CHANGE Edward Jones - Jennifer Seys 551 Belle Avenue, Suite A, Mankato

Kohort Energy 1819 Adams Street, #315, Mankato

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GROUND BREAKING Mom & Pop’s 629 North Riverfront Drive, Mankato

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RIBBON CUTTING MRCI Thrift Shop 111 Sioux Road, Mankato

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RIBBON CUTTING The Landline Company 3030 North Airport Road, Mankato

SS Boutique 1415 1st Avenue, Mankato

TOV Chiropractic 1813 Adams Street, Mankato

32 • JULY 2019 • MN Valley Business

2019

2019 SPONSOR:

5 - 7 PM

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JAN 8

240 Stadium Road, Mankato

JUL 9

WHY JOIN Laurels Edge Assisted Living

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Carlson-Tillisch Eye Clinic

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MAY 7 JUN 4

2019

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GREATER MANKATO GROWTH?

AUG 6

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1 Civic Center Plaza, Mankato

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OCT 1

Hilton Garden Inn

1575 Lookout Drive, North Mankato

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Mayo Clinic Health System Courtyard by MarriottBuild Hotelyour & Event Center NOV 5 Brand; 1025 Marsh Street, Mankato 901 Raintree Road, Mankato grow your business. Dotson Iron Castings Stand out and get Exclusively It’s not just st WHO WHO you ou Diamonds DEC 3 200 West Rock Street, Mankato 1601 Adams Street, Mankato noticed! know, it’s who knows k YOU. Networking IS May Business After Hours hosted by Courtyard by Marriott Hotel & Event Powerful.

NETWORKING TW WORKING ORKING

BE IN THE KNOW

LEARNING

Gain access cces to Member Exclusive Content to help grow your business.

Center

MEMBER EXCLUSIVE BENEFITS

Receive our member only emails making you the first to know the latest news.

TALENT REFERRALS We only refer member RETENTION NOTE: Calendar magnets are available at the check in table at each Business After Hours event and they are available at our

businesses. Word of mouth Keep your employees engaged and retained with from being a valued access to representatives our member only Business After Hours gives from Greater Mankato Growth member businesses at the Engaged member of Level GMG.or higher an opportunity to and programs. get together withevents one another to exchange ideas and learn about each other’s businesses. greatermankato.com/events office at 3 Civic Center Plaza, Suite 100. Also, a downloadable version is available at greatermankato.com/business-after-hours. and direct referrals come

SHAPE YOUR CREDIBILITY COMMUNITY belonging. Research shows

THANK YOU!

Our volunteers allow Greater Mankato Growth to do so Raise your reputation by much more than our staff would be able to do alone.

Your investment helps us continue to build the best environment for your business and its employees.

that businesses who belong to a chamber of commerce are more successful.

NEWEST

Greater Mankato Growth Members

Healing Rhythms Music Therapy healingrhythmsmt.com

Healing Solutions healthsolutionsllc.com

greatermankato.com/join April 2018

Kinetic Spine & Sport kinetic-chiro.com

Primerica - Tabitha Melvin primerica.com/tabithamelvin

TOV Chiropractic tovchiropractic.com

MN Valley Business • JULY 2019 • 33 greatermankato.com/join

moremankato.com We asked Monica Stephanie of Drummer Companies...

Why Do you LOVE Living in Greater Mankato?

grew up here and there are so many things we love about Mankato! Our family really loves the Kiwanis Dog Park. Our fur babies get to run and play with friends in a beautiful park. With all the great community amenities, it’s so easy to make lasting memories. Mankato is diversified in that it has a small town feel but big city amenities. We have agriculture all around us...but we also have arts, culture and festivals! It’s a well rounded town - the best of all things Greater Minnesota has to offer in one place! You can get from one end of town to the other in 15 minutes. Other communities are just one long strip and it seems to take

PRESENTED BY:

forever to get where you’re going. The convenience and scenery can’t be beat and we’ve got amazing views of the Minnesota River Valley.

Find your “WHY” at moremankato.com/virtual-tours Thank you to Drummer Companies for being early adopters of the More Mankato community campaign and for continuing to support everything Mankato!

We would like to thank the bands, all the attendees and community, the business vendors and the 2019 sponsors for making the 16th Annual Songs on the Lawn a smashing success!

An event of:

2019 SPONSORS

greatermankato.com/songs

34 • JULY 2019 • MN Valley Business

Members of

MEMBERS OF ALPHA MEDIA MANKATO

This activity is funded, in part, by the Prairie Lakes Regional Arts Council with an appropriation from the Minnesota State Legislature with money from the State’s general fund.

WHAT’S AGRITOURISM GOT TO DO WITH YOU?

ummer is flying by which means that fall is just around the corner and folks will start thinking about wearing cozy sweaters, sipping pumpkin spice lattes and marking their calendars with all the festivities happening in the fall. When Mankato residents, visitors and business organizations come together to celebrate the heart of the harvest season they “Gather in the GreenSeam”; a region in America’s heartland where agriculture is a catalyst for the fun experiences occurring throughout September and October. This all-encompassed celebration includes, but is certainly not limited to artisan winery and craft brewery tours and tastings, fall festivals, farm tours, educational events and beyond.

WHY JOIN

GREATER MANKATO GROWTH?

Not sure if any of this applies to you? You may be surprised on the unique marketing opportunities your businesses can take part in while connecting with area locals and tourists.

EXPOSURE

Build your Brand; grow your business. Stand out and get noticed!

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

BE IN THE KNOW

LEARNING

Gain access cces to Member Exclusive Content to help grow your business.

TALENT RETENTION

MEMBER EXCLUSIVE BENEFITS

Keep your employees engaged and retained with access to our member only events and programs.

Receive our member only emails making you the first to know the latest news.

REFERRALS We only refer member businesses. Word of mouth and direct referrals come from being a valued by Brittany Junck, Visit Mankato, member of GMG. Marketing & Communications Coordinator

SHAPE YOUR CREDIBILITY HOW TO GET INVOLVED? your reputationisby The impact that agriculture has on industries beyond traditionalRaise farming production exponential. New experiences have COMMUNITY belonging. Research shows

derived from the ‘fruits’ of conventional farming, creating Your investment helps useven more demand in harvest-related activities. Below is a list of that businesses who about belongor are already hosting an event a wide variety of events and activities thattofall under If you are thinking continue build theagritourism. best to a chamber of commerce from September 14 - October 26 environment and would like be included in the 2019 Gather in the GreenSeam festivities this fall, forto your contact Carrie with Visit Mankatobusiness at ckijenski@visitmankatomn.com. and its employees. are more successful.

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Off Road Vehicle Tours Game Preserve Hunting Fishing Wildlife Tours Wildlife Photography Horseback Riding Camping/Picnicking

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Farm Stands You-pick Orchards Market Stands

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April 2018

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Entrepreneur, Maggie Knier, creates her own success Written by Maggie Knier, 2019 Marketing Grad

rowing up, I was a serial entrepreneur. Middle school Maggie was constantly coming up with wild business ventures— from lemonade stands to custom knitwear. None of these schemes ever seemed to pan out, until 2011 when I started creating handmade headbands and listed my first product on 2True.etsy.com. Over the next seven years 2True provided me with a small side income as I continued selling on Etsy and started participating in craft shows around Minnesota. In November of 2018, I decided I wanted more. Besides my entrepreneurial aspirations, I’ve always been an extremely competitive person. So, after eight years of moderate luck, I decided it was time to stop waiting for success to happen, and instead decided to make it happen. Enter: The Center for Entrepreneurship and Innovation (CIE). The CIE and its Director, Yvonne Carriveau, have been instrumental to 2True’s growth over the past six months. Yvonne pushed me to apply for the Big Ideas Challenge (BIC), a student venture competition with a grand prize of $5,000. I can honestly say that participating in the Big Ideas Challenge was one of the best experiences of my college career. After submitting my initial application in January and moving on as a finalist in February, the weeks leading up to the final pitch event on April 15th were some of the most exciting and nerve-wracking I’ve ever experienced. As a finalist, I was required to submit a comprehensive business plan and also present a 6-minute pitch to an audience and panel of judges. On the day of the event I was anxious, confident, and excited all at once. I had practiced my pitch and I knew my business inside and out. On the other hand, I couldn’t possibly know how the judges would react. Would they like my idea? Would they have questions I couldn’t answer? To be honest, I don’t really remember giving my pitch—it was

all kind of a blur. I do remember anxiously waiting backstage as they announced 3rd and 2nd place, and finally called my name for 1st! For the rest of the day I couldn’t stop smiling as I walked around after the event and saw countless people sporting 2True Headbands. I have a passion for people and networking, and even if I hadn’t won, the connections I made and relationships I built were more than worth the effort. When I started 2True Headbands at 13 years old, I never could have imagined the impact it would eventually have in my life. The connections and opportunities which have arisen in the past eight years are overwhelming, and I’m Top: Maggie Knier took first place at the so thankful to everyone who has 2019 Big Ideas Challenge. helped me along the way! I would Bottom: The 2True handmade headbands especially like to thank my parents, Knier sells on 2True.etsy.com Yvonne Carriveau, and Kayla Rossiter for their mentorship and faith in 2True, and also the members of Delta Sigma Pi for their support. My business is my passion, but it’s something I could never do without help from the people in my life. 2True has come a long way in the past eight years, and I can’t wait to see where it takes me in the future! ..........................................................................................

For more information on the Center for Innovation and Entrepreneurship and the Big Ideas Challenge, visit cob.mnsu.edu

MN Valley Business • JULY 2019 • 37

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Mayo Clinic Health System in Mankato Call 507-594-7474 to schedule an appointment. mayoclinichealthsystem.org

MN Valley Business • JULY 2019 • 38