MVBM-May2017 by Free Press Media

The Definitive Business Journal for the Greater Minnesota River Valley May 2017

Attorney Jared Peterson, of Fafinski Mark & Johnson in New Ulm. Photo by Pat Christman.

Business to Business Professional services fill a growing need Also in this issue • BLUEBIRD CAKERY OPENS IN MANKATO • MANKATO MATTRESS MAN DOES IT ALL • TOM YENISH’S HISTORY IN THE HOTEL BUSINESS

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COLLABORATION AND INNOVATION : TODAY’S ACCOUNTANTS ARE SAVVY BUSINESS ADVISORS Remember when the word accountant would conjure an image of someone working frantically amidst a mountain of paper, green visor atop their noggin, pocket protector carefully lined with finely sharpened pencils, a slight shake in their hand from the dangerous level of caffeine consumed tallying whatever it is that accountants tally (most likely beans)? You rarely saw one during the light of day January through mid-April and weren’t quite sure what they did the rest of the year. On the rare occasion you had the opportunity to chat with one, they spoke in their own language—section 368 reorg, section 1033 involuntary conversions, 263A, etc. Those days are long gone. Today’s accountants are business advisors who are client centric. They build relationships, listen to clients to understand their businesses, obstacles and opportunities so they can provide innovative, proactive solutions.

From the Ground Up

One such solution is Eide Bailly’s Possibilities Center. It’s a technologically advanced suite of management advisory services that allows you to get out of the day-to-day operations of your business and focus on doing what you love (and why you got

into business in the first place). What could you do with the time you gain by having a team of experts providing outsourced CFO services, HR services, bookkeeping services? Imagine the possibilities if you collaborated with your advisory team on your business and strategic plan or developing your exit strategy.

From the Cloud Down

Another solution is risk advisory services. With the pace of change in the business environment and the ever-increasing data security issues, risk advisory services focuses on ways to address risk and improve performance. Imagine the time, money, and sleepless nights you could save by having a team of experts test and assess your internal controls, your IT systems and security before a breach or fraud occurs.

More than Just Numbers

Yes, we still provide compliance services and are very (very) busy January through April, but today’s accountant brings a more holistic, consultative approach focused on innovative, collaborative solutions without the green visor and pocket protector.

By: Heather Thielges, Partner Heather has been advising and serving businesses in a variety of businesses for more than 15 years. She is an active member of the Mankato community, serving on the YWCA and YMCA board. She was awarded the Greater Mankato Yellow Rose for her dedication to advancing the status of women and commitment to community.

Contact at 507.386.6225 or hthielges@eidebailly.com.

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number of recent Minnesota court decisions have brought an issue many employers are unaware of to the forefront: whether an employer is has negligently hired, or is negligently employing, someone who may cause harm to others. By way of background, Minnesota courts recognize three causes of action where a claimant sues an employer in negligence for injuries caused by one of its employees: negligent hiring, negligent retention, and negligent supervision. In negligent hiring claims, the question is whether an employer, at a time it hires an employee, could reasonably have foreseen that the individual poses a threat of physical injury to others. That potential liability goes beyond whether injuries that happen within the “scope of employment” – meaning, that arise out of performance of the employee’s work-related duties – and to any other harm an employee may cause. The employer’s liability is limited, however, by the fact that it can only be responsible if it knew, or

should have known, that the employee was violent or aggressive. An employer “should have known” of dangerous propensities if they would have been uncovered by “reasonable investigation.” Similarly, generally an employer has the duty to refrain from retaining employees with known dangerous proclivities, and thus can be held liable for “negligent retention” when they do so. To be held responsible, however, an employer must, during the course of employment (as opposed to negligent hiring before employment), become aware or should have become aware of problems with an employee that indicated his unfitness. The employer must also take necessary measures to ensure the safety of others, whether by discharging the employee, reassigning the employee, or otherwise making sure that no one will be harmed. Again, the harm at issue may arise outside of the scope of employment, and yet the employer can be held responsible.

The lesson of this and other cases is fairly straightforward: within the bounds of law, an employer must appropriately vet those individuals it plans to hire. Upon hiring someone, if it receives information that someone is a danger to others, it is vital that an employer take steps to minimize the threat that employee poses to coworkers or the public at large, and depending on the seriousness of the conduct, termination should be considered. Finally, despite limitations on liability such as those set forth by the scope of employment, employers should vigilantly ask whether a jury may consider the possibility of assault or other harm to others to be a well-known risk of a particular industry, and if so, ensure that all employees in contact with the public, especially vulnerable individuals.

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F E A T U R E S May 2017 • Volume 9, Issue 8

From accountants and lawyers to architects and workers’ compensation consultants, professional service businesses have a key and growing role in the area economy.

Kelsy Wittmeier used a Kickstarter campaign to open a bakery in Faribault and finding high demand for her cupcakes has opened a second Bluebird Cakery in Mankato.

Tom Yenish is well known in Mankato for this Pet Expo and The Paw pet resort businesses, but many don’t know he’s also always been involved in the hotel industry.

Justin Roberts knew that if he was going to compete with all the other stores in town his Mankato Mattress Man would have to operate efficiently and without high overhead.

MN Valley Business • MAY 2017 • 3

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MAY 2017 • VOLUME 9, ISSUE 8 PUBLISHER Steve Jameson EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Heidi Sampson Brent Pearson Nell Musolf Dan Greenwood PHOTOGRAPHERS Pat Christman Jackson Forderer COVER PHOTO Pat Christman PAGE DESIGNER Christina Sankey ADVERTISING Phil Seibel MANAGER ADVERTISING Jordan Greer Sales Josh Zimmerman Marianne Carlson Theresa Haefner Thomas Frank 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 344-6336, 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.....................................5 ■ Business Commentary.........................6 ■ Business and Industry trends..........20 ■ Retail trends.....................................21 ■ Agriculture Outlook..........................22 ■ Agribusiness trends..........................23 ■ Construction, real estate trends.....24 ■ Gas trends........................................25 ■ Stocks...............................................25 ■ Minnesota Business updates............26 ■ Job trends.........................................26 ■ Schmidt Foundation.........................28 ■ Greater Mankato Growth..................30 ■ Greater Mankato Growth Member Activities ............................32

From the editor

By Joe Spear

Business potential that is flying under the radar The “professional and business services” industry that often flies under the radar when we discuss jobs and the economy provides a unique opportunity, it seems, for a place that is bursting with highly educated young professionals looking for rewarding and interesting careers. Our in-depth feature this month on the emerging professional services business brings to our attention such intriguing occupations as forensic accounting and agricultural lawyering. Then there are the worker compensation consultants who work with employees, education, medical professionals and businesses to get injured employees back to work or back into the work force. The industry has been steady and growing in the last five years in the Mankato-North Mankato metropolitan area, according to the Bureau of Labor Statistics. Employment has hovered right around 3,650 for the last few years, with average employee pay about $48,000 per year in 2015, up from about $42,000 in 2012. Forensic accountants help businesses detect fraud. While regular audits may catch irregularities, it’s often a business owner who feels that something just doesn’t seem right who calls in the forensic accountants, according to Ben Ellingson, managing partner at Eide Bailly in Mankato. Jared Peterson, an attorney who has practiced in New Ulm for 16 years, joined on with a firm new to the area in Fafinski Mark & Johnson. The Twin Cities-based firm wanted to expand its ag business and what better place to expand than in the heart of ag country in New Ulm. The firm has 27 attorneys in two offices and Peterson says the

4 • MAY 2017 • MN Valley Business

expansion to New Ulm fits right into the Greater Mankato Growth collaboration called GreenSeam, that aims to create an aggregation of firms that serve or do business in the huge agri-industry around the Mankato area. The firm works with farmers, grain elevators and co-ops on everything from human resource issues and estate planning to mergers and acquisitions. The presence of these “professional and business service firms” should play into GMG’s overall strategy to keep the best and brightest graduates here in Mankato. Increasingly, these firms can have wide geographic reach but can be based here. Good examples include the ISG engineering and architects firm as well as businesses like Eide Bailly. Some firms still struggle to fill these solid professional positions however. A recent state job vacancy report showed job vacancies in the Mankato region were down 16 percent from last year, but the highest job vacancy rate was for sales positions. And Greater Mankato Growth has assembled an impressive task force of some 100 plus business and community leaders to address the recruitment and worker supply issues. At the same time, the cities of Mankato, North Mankato and St. Peter have been growing their visual appeal as interesting places to live, a big plus for young professionals. A number of community leaders recently participated in a Greater Mankato Growth get-toknow Mankato seminar in the Twin Cities for real estate and development professionals. The effort aims to get them to consider doing business and

starting projects in Mankato. Mankato has gone from a typical Minnesota small town with tumbleweed-like downtowns to a beaming city with impressive entertainment and recreation options. Those in attendance heard reports of how housing prices still remain as much as 30 percent below what could be purchased in the Twin Cities and the cost of living is 5-6 percent below the Twin Cities. They heard that Mankato has an economy with a gross domestic product growing faster than other Minnesota metro areas and the downtown recently saw commercial investment of $20 million. Mankato retail sales have been growing about 4.5 percent per year since 1994 and now total almost $1.4 billion. Employment has been growing in Mankato about 1.66 percent per year since 1990, including during the dotcom bubble of the late 1990s and the recession of 2008. And Mankato is chock full of good secondary and post-secondar y education opportunities, the building blocks of a robust economy. All of this adds to the attractiveness of the place that has a small-town feel but plays big.

Local Business People/ Company News

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Stoufers join True

Tana Stoufer and Dave Stoufer have joined the True Real Estate team as real estate agents for the Mankato location. In the past, Tana researched, drafted, promoted and administered developmental land use and environmental policy for local and state levels of government. She continues to carry a special interest in the environment, specifically the health and longevity of Greater Mankato’s area lakes and waterways. Her husband, Dave Stoufer, is a lifelong resident of the Mankato area. He has been a business owner since 1999 at Stoufers Auto, Trailer, Golf Car Sales of Madison Lake.

Primrose director honored

Primrose Retirement Communities has named Mankato Executive Director Carol Armendariz as Primrose Executive Director of the Year. Armendariz has served as the executive director of Primrose of Mankato since 2014. She oversees the day-to-day operations of the entire community and acts as a resource and leader for the Mankato Primrose team. “Primrose is an excellent company to work for, and I am honored to hold the position that I do,” Armendariz said. Primrose Retirement Community of Mankato, located at 1360 Adams Street, consists of 34 independent living apartments and 23 assisted-living apartments.

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

Read us online! MN Valley Business • MAY 2017 • 5

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Business Commentary

By Brent Pearson

The changing demographics of Region Nine S

outh central Minnesota is in the early stages of a workforce shortage. The notion bounced around in workforce planning circles, economic development discussions and human resources departments is that the solution to this shortage is to lean on a growing minority population. Minnesota’s foreign-born population is increasing faster than the national average and has tripled since 1990. The Minnesota State Demographic Center sees this trend continuing for Region Nine. Their projections show minority populations growing by 156.5 percent over the next 18 years (14 times the rate of the rest of the population). Perhaps equally as eye opening is the fact that the white-alone population is projected to lose 0.1 percent of its population by 2035. While Region Nine’s population will still be predominantly white (83.5 percent), it will be less white than it is now (94.6 percent). With minority populations on the rise, and immigration increasing, it seems logical to turn to that growing segment of the population as an easy fix. But workforce shortages do not have an easy fix. There are skills, certifications, wages, and housing to consider as well as other elements that make attracting workers of any ethnicity a challenge. Also, a key voice is often missing from these conversations. Who is asking minorities if they see themselves as the solution? Perhaps a growing minority workforce isn’t interested in filling the jobs that will be available.

Barriers exist to many job seekers, not just new Americans, but for many immigrant and refugee populations, those barriers are more abundant and harder to hurdle. Another important question is, what types of jobs are going to be available that need filling? Employment projections created by the Minnesota Department of Employment and Economic Development offers a glimpse into the jobs that will grow between now and 2024. There are projected to be 2,114 more jobs in 2024 than there were in 2014. Of those, 85 percent are projected to be personal care and service and healthcare support occupations. Add in 432 healthcare practitioners and technical occupations and much of the growth will be in health care and personal care professions. The skills for those positions are often highly specialized and include various layers of certifications, advanced degrees, and licenses – which take time to complete. For example, 972 of those projected 2,114 new jobs will be personal care aides. Minnesota statute requires that many personal care assistants pass a certification test in the State of Minnesota. These tests are offered in multiple languages but can take time to prepare for and pass. As noted in an article in MN Valley Business last March, creating a diverse workplace is essential for many businesses in southern Minnesota. One excellent resource is an untapped pool of refugee workers from Somalia. Mohamed Abdulkadir is a Refugee Training Consultant

6 • MAY 2017 • MN Valley Business

with MRCI WorkSource in Mankato. His role is to connect businesses to Somali refugees seeking jobs. He provides language and cultural support to job-seekers, employees and businesses and works to directly place a growing Somali population into jobs. When considering an impending workforce shortage, Abdulkadir notes, “If I look at my community, I wonder how [that] can happen. Fifty-five percent of us are not working and people are driving from far away to get a job.” In Abdulkadir’s role, he works primarily with Blue Earth County, but when there is demand for workers, he places refugees in jobs across the region. Both the clients he serves and the employers he works with see value in Abdulkadir’s ability to knock down barriers. Barriers range from transportation, access to quality daycare, employment applications and interview processes that do not translate well with Somali refugees and other new Americans, and language and communication gaps. These barriers pose challenges when trying to gain full-time and non-seasonal work. Most of Abdulkadir’s clients are primarily interested in manufacturing production work. By 2024, DEED estimates that there will be 114 fewer production occupations than there were in 2014. However, he does not worry about that number, he sees potential for immigrants to highlight their current skills to transition into other opportunities. For example, personal care assistants

can obtain additional certifications and move into nursing programs and other healthcare support occupations. The key is getting the second generation of Somali workers (children of current refugees) onto the right career pathway. While engaging refugee populations to fill an impending workforce shortage seems like a nice fit, critical work by people on the frontlines, like Abdulkadir, are essential to make that fit. While employers are receptive, it will take time. “Change happens over time, because some of the newcomers are working through various layers of cultural adjustment,” says Jessica O’Brien, Community Engagement Manager with Region Nine Development Commission. There is not a simple solution to workforce shortage.; however, there are some solutions, but collaboration is key. According to O’Brien, “It is a team effort which makes it important to have a cultural broker and someone connected to Adult Basic Education to help get workers credentialed and build skills.” The work of Abdulkadir is one piece of the equation. Another piece is getting the right people to the table to talk about their differences. Region Nine Development Commission, in partnership with the YWCA Mankato, Greater Mankato Diversity Council, Blandin Foundation, and Blue Cross and Blue Shield of Minnesota Foundation are holding these kinds of conversations. It’s Time to Talk: Forums on Race are being scheduled across the region. They provide a great opportunity for people to build awareness and have meaningful dialogues about race. Barriers are much easier to knock down if people work together and understand each other.

Brent Pearson is project development planner with Region Nine Development Commission. brent@rndc.org; 507-389-8867.

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Terry Henricksen of DCI of Minnesota.

The Pros Professional services aid businesses, fuel economy By Tim Krohn | Photos by Pat Christman and Jackson Forderer The increase in regulations and complexity and the Mankato region’s steady rise as a business and shopping hub mean growing businesses increasingly rely on professional ser vice businesses to handle issues for them. And those professional services, from accountants and lawyers to architects and consultants, are in themselves a lucrative slice of the local economy, paying top salaries that help fuel other local economic development. “It sure seems like professional services are growing

here,” said Ben Ellingson, managing partner at Eide Bailly in Mankato. His firm certainly has, steadily adding staff often fed to them from the accounting program at Minnesota State University. Jared Peterson, an attorney in New Ulm, is part of a firm new to the area — Fafinski Mark & Johnson. The firm was formed 17 years ago in the Twin Cities but opened an office in New Ulm last year. “They wanted to expand their ag practice,” said

Cover Story

8 • MAY 2017 • MN Valley Business

Ann Coleman (right), a senior tax manager at Eide Bailly, talks with Betty Comstock at their office located on Excel Drive in Mankato. The business will be moving to downtown Mankato in the fall of 2019. Peterson, who was an attorney with another firm in town for 16 years and has a solid farm background. Peterson thinks the recent focus on promoting the region as a destination for ag businesses, through a Greater Mankato Growth collaboration called GreenSeam, will help solidify the area as an agribusiness epicenter. While accountants and attorneys provide wellknown, traditional ser vices, some professional services are much more specialized. “We’re in a unique niche. We are under the radar,” said Terry Henricksen of DCI of Minnesota in North Mankato. They work with people who were injured and on workers’ compensation to get rehabilitated and back to work. DCI is often hired by an insurance company and serves as a go-between to everyone involved in the workers’ comp system. “We work to get people back to wellness and back to work,” Henricksen said.

Workers’ comp complexity

DCI is a locally owned business started in 1990 by several people who had worked for a national vocational rehabilitation company. “A lot of our referrals come through work comp insurance companies,” Henricksen said. For employees off the job because of a work comp claim, the system supplies money for lost wages, medical care and vocational rehabilitation. DCI handles the rehab with its qualified rehabilitation

consultants. “Our people follow the injured worker medically and work with them to return to work, whether that means going back to their original job or, if needed, to help them find a different job.” Henricksen said the workers’ compensation system in Minnesota is very structured. “It’s statutory and there’s a lot of paperwork we’re required to fill out,” he said. “Statistically, workers who get our types of services get back to work quicker. Otherwise people get kind of lost in the system. There can be this feeling that you got injured at work but maybe they aren’t giving you all the information and help you need. “We’re the communication piece between the workers, and lawyers, and insurance and business.” DCI’s consultants need to hold a master’s in vocational rehabilitation or had to come up through a registered nurse program. He said the consultants will talk with the employee and their doctor and determine when and how they can go back to work. “Then we can say to the employer, this is what this employee will be able to do as of say May 1 and do you have something they could do.”

Eide Bailly’s growth

Ellingson said the accounting firm’s tax and audit work is growing, but said they’ve focused even more on the increase in additional services their staff can offer. One of those areas is in forensics.

MN Valley Business • MAY 2017 • 9

Ben Ellingson, Partner in Charge of Eide Bailly. Ellingson said the business will be celebrating its 100th anniversary in June.

10 • MAY 2017 • MN Valley Business

“I get a call from a partner in a business who says, ‘We should have more cash here than we have,’ or they have suspicions of fraud and we bring a forensics team in to investigate if there is fraud.” He said sometimes the suspicion comes up during a routine audit Eide Bailly does on the business, but Ellingson said most of the time the owner or partner notices something just isn’t right. He said the investigative side of accounting is a little more exciting to a staff that usually is poring over tax returns and doing audits. “It’s of real interest to recent grads. It draws a lot of attention.” Ellingson said the firm also is doing more business evaluations, helping businesses deal with the requirements of the Affordable Care Act, improving cybersecurity and handling payroll for companies. “Cybersecurity is focused on everything around their financial systems. It tries to take a bigger picture of your organization to see where the bigger risks are and to make sure their IT people are aware of it and how to make it better. “It’s one of those things that’s easy to overlook.” He said they’re also seeing an increase in suspicious emails sent to employees of businesses and try to educate them on deleting anything suspicious. “A lot of the time businesses’ firewalls are good, but if the email gets to people, all the firewalls don’t do any good.” Ellingson said more businesses also are outsourcing their payroll,

An artist rendering of the new Eide Bailly building downtown. bookkeeping and HR to firms like Eide Bailly. “And we look at what we can do with our software to make it easier for businesses that are starting up. We host the systems and the smaller businesses can access it.” The firm has about 85 employees in Mankato. This summer the company, which has 29 offices in 13 states, is celebrating its 100th anniversary. And in fall 2019 the firm will move from its offices in the Eastwood Industrial Park to a new downtown building on the corner of Main and South Second streets being built by Tony Frentz and Rob Else.

Agribusiness attorneys

Peterson grew up in New Ulm in the farm implement business. After working 16 years for another law firm in town, he joined Fafinski Mark & Johnson when they recently expanded beyond their Eden Prairie headquarters. With 27 lawyers in the two locations, Peterson said the firm touts itself as having the expertise of a large firm but the customer service of a smaller firm. He said the region is a hotbed of agribusiness and thinks initiatives such as GMG’s GreenSeam will only expand opportunities. “GreenSeam is a great concept. They’re getting out there and I hope it develops further to become a real agricultural hub in here.”

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Peterson works with a lot of farm cooperatives, private grain elevators and farmers. “With co-ops there are a lot of mergers going on, so there are a lot of corporate governance issues, environmental and employment issues and real estate issues. There have been a lot of mergers in the industry in the last few years.” In farming, the trend is fewer and larger farms and Peterson said the rate of retirement is ratcheting up right now. “With the high crop prices a few years ago a lot of older farmers didn’t retire, but now a lot of them are and the farms are getting fewer but bigger.” The retirements means he’s doing a lot of estate planning. “There are types of partnerships to transfer assets through. You can incorporate a variety of family members into the business and still keep it in the family. Some use LLCs, but the partnerships seem more popular today.” He said many farms being transferred in a will run up against

Minnesota’s relatively low estate tax limit. The first $1.8 million in an estate’s value is exempt from state inheritance taxes but the federal exemption is $5.4 million. “That’s always a concern. With real estate prices up, that adds up quickly.” He said the sluggish farm economy in recent years has hurt farmers. “But farmers’ balance sheets are still pretty strong. A lot of them knew prices wouldn’t last forever, and they planned for it. A lot paid down debt or just saved money,” he said. “I haven’t seen an uptick in foreclosures or bankruptcies. But if crop prices stay low for a number of years, it might be another story.” MV

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Kelsy Wittmeier used a Kickstarter campaign to open her first Bluebird Cakery in Faribault and now operates one in downtown Mankato. Bottom: Bluebird Cakery is at 607 South Front Street in Mankato.

Sweet taste of success

Bluebird Cakery opens its second location in Mankato By Heidi Sampson Photos by Pat Christman

elsy Wittmeier began honing her bakery decorating skills when she was 16 as a cake decorator for Rainbow Foods in Bloomington. Now Wittmeier is overseeing operations at her Bluebird Cakery business in Faribault and her recently opened shop of the same name in downtown Mankato. Originally from Bloomington, Wittmeier earned degrees in business management and human resources from the University of Wisconsin-La Crosse in 2010. She said creating beauty has always been

important to her. “I’ve always been very interested in visual arts,” said Wittmeier, “Even when I went to college, I’ve always had a customer service focused job, as well was a cake decorating position, which has always been more of a creative outlet for me versus a job.” While at the university Wittmeier chose to study abroad spending time in Australia where she worked for a small seaside café. After her graduation from college, Wittmeier went back to Australia to spend more time absorbing and learning about

Cover Spotlight

14 • MAY 2017 • MN Valley Business

foods.

Farmers market to store front

Wittmeier’s Faribault store opened in November of 2015, growing out of her success at the farmers market in both Faribault and Northfield during consecutive years. Her first summer was with the farmers market in Faribault where she made a bunch of cupcakes topped with her own butter cream frosting to sell. To her delight she sold them all. During the next farmers market Wittmeier came back with even more cupcakes anxious to gauge a sustained Bluebird interest in her product. Within no time Cakery always at all, her customers began to ask about looks for new cupcake orders, cakes in general, cupcake creations, wedding cakes, if she had a Facebook including soliciting page, a website, a storefront. Clearly, ideas from customers. she had a customer base interested in her product. together six or seven different packages. Once we During her first summer at the Farmers Market, she opened our store, we would then deliver on the employed her family to assist her in the selling the promised goods and services,” she said. cupcakes. By the second summer, she expanded to “What I liked the most about Kickstarter is that it include the Northfield farmers market and hired two allowed for the owner to retain 100 percent of their employees to assist her in the endeavor. In attempt to business. So I didn’t have people buying stock in the keep up with the quickly increasing demand, Wittmeier business. I think Kickstarter gives the extra boost of found a commercial kitchen that closed at 2 p.m. Her confidence to get people to contribute because they plan was to rent the space so she could keep up with understand what they are backing and it’s safer for the increased demand. With the growing demand she everybody.” began to think about the possibility of her own storefront location. But having recently finished Bluebird Caker y college and school loans of her own to pay off, finding in Mankato a business loan – even with provable demand for her The Mankato location of Bluebird Cakery, came product – proved difficult. about after Wittmeier’s many visits to Mankato’s “I turned to Kickstarter and worked with friends and bridal fairs, as well as from a good deal of wedding family to put together a campaign,” Wittmeier said. cake deliveries for the Mankato area. “We needed to get visibility and market the services One thing that has brought success to Wittmeier’s we could offer as a business if we had a brick and Faribault location, which she is continuing in Mankato, mortar store. Even though I had my share of is to offer her customers a chance to suggest possible conversations with people who felt my idea wouldn’t cupcake creations. For instance, Faribault has the Cup succeed in Faribault, I was seeing an entirely different Cake of the Week, which is garnered from customer response to my product. For instance, the commercial ideas of what would make an excellent cupcake. So far, kitchen we were renting, many days we would work they’ve created a wide variety of cupcakes such as from 3 p.m. to 5 a.m. and I still felt like we weren’t Chocolate Maple Bacon cupcake, a Strawberry keeping up as much as we could be with our own Cheesecake cupcake, a Monster Cookie cupcake, a store.” Sugar Dough cupcake and even one that contained Wittmeier hoped the Kickstarter campaign would Jalapeños. raise $25,000 to help get the Faribault store up and “Our goal is to make our customer’s day, better,” running. Kickstarter is an online funding forum, said Wittmeier. “We offer cupcakes and gourmet primarily for creative businesses and tech companies. coffee, electrical outlets by all of our tables, and an People make their case online for why they need outdoor patio. We’ve tailored the design of our location funding, what their obstacles are for the funding, and for study groups, group meetings, and business how they plan to overcome those barriers. Since meetings. I think that developing leaders is the most Wittmeier had created a video that helped to inspire gratifying and rewarding thing you can do,” she said. her possible contributors, she also included an “We dream big here and we challenge each other in operational funding budget to explain where and how healthy ways to create new cupcakes, as well as new the funds received would be used. cake and wedding cake designs. If you have an idea, “It’s essentially an exchange of goods and services we can make your cake a reality.” MV that we promised in return if our funding goal is reached,” said Wittmeier. “In 60 days, we raised just shy of $30,000 with the Kickstarter platform. We’d put

MN Valley Business • MAY 2017 • 15

Tom Yenish has been in the hotel business his whole life but until now hasn’t operated one in Mankato.

A work in progress Yenish says his dad is his role model By Nell Musolf | Photos by Pat Christman

om Yenish has been a part of the hotel industry for most of his life. As a child, he lived in a hotel in St. Cloud, The Gateway, built by his parents. Yenish remembers his parents working around the clock while he and his siblings watched black and white television in the lobby. One of Yenish’s first jobs was bringing extra towels to guests and being occasionally rewarded for his work. “If a guest gave me a dime I would go and buy a candy bar,” Yenish recalls. “Customers thought it was so cute. Those were my first customer service experiences.”

The Gateway Motel involved the entire family including his grandmother who was the head of housekeeping. “Back in those days nobody had credits cards and guests would pay for their rooms in the morning when they checked out,” Yenish said. “The room rate was only $7 a night!” Yenish believes that watching his parents helping customers was what started his understanding of what it takes to make it in business. “My dad was a people person, big time,” Yenish said. “Very entrepreneurial spirited all of his life. My dad

Profile

16 • MAY 2017 • MN Valley Business

Yenish’s Motel 6 going up next to The Paw will feature 66 rooms on three floors. and I have a lot of the same drive. I always wanted to be like him. He was a better version than I am. I am a work in progress.” In 1984 Yenish’s father built another hotel in Mounds View, Minnesota. Yenish was living in Mankato at that time and working at a roller skating rink he opened with his father, Skatin’ World. It was during that time Yenish became interested training dogs. “I started showing dogs in 1977, Rottweilers. I showed and trained dogs for 20 years,” Yenish said. That interest led to the opening of another business, Pet Expo in Mankato. Yenish opened the pet store in 1987 in what is now the warehouse of the current Pet Expo. At that time, Yenish hired the first general manager of Pet Expo, Bob Bomier. “I hired Bob because my father and I had decided to build a hotel in Ft. Myers, Florida. I needed someone I could count on to run things for me while I was away,” Yenish said. “I’ve been blessed with great managers and I love them like they are my children.” That hotel, the Wynstar Inn and Suites, opened in 2001. Yenish and his wife, Dawn, worked at the property during its early years. The hotel was sold in 2012 after Yenish’s father passed away at the

age of 89. “Watching my dad communicate and seeing how appreciative he was of his employees had a big influence on me,” Yenish said. “I always thought ‘I want to be like you!’ He tapped into his employee’s resources all the time. He left big shoes to fill.”

Motel 6 going up

Yenish and his family had returned to Mankato where Yenish poured himself into yet another project, the pet resort The Paw. “Bob Bomier and I thought up the idea together,” Yenish said. “He thought of a boarding facility and I thought of the swimming pool and training center. The daycare idea came into play as we toured other facilities.” Yenish and Bomier traveled to trade shows in several states and picked up ideas from other pet businesses. Ground was broken in 2007. “I love seeing dogs have fun,” Yenish said. “Seeing them learn how to be social and nice playing dogs. I wish the dogs that came to The Paw to swim, board, play in daycare and getting trained could speak English so that they could tell their mom and dad how much fun they had while they were

there.” With Pet Expo and The Paw thriving, Yenish is in the process of adding another business to his list. A Motel 6 is in the process of being built on the property north of The Paw. The motel will have 66 units on three floors. The design is contemporar y with simple, comfortable rooms. “We chose to build a motel next to The Paw because we owned the property, it has great access to Highway 22 with good visibility and because the motel business is in my blood,” Yenish said. “If everything goes to plan, we should be open in September.” Yenish’s three children, Sarah, Lauren and Adam, are continuing the family tradition of working for their father’s business. Sarah and Lauren work at The Paw while Adam works at Pet Expo. Yenish said, “It is super satisfying to see our kids have an interest in what our businesses are all about and wanting to work with our managers. They are starting at the bottom and they are doing just great and I am very proud. One thing I want them to learn is that it is important for them to find something that they love to do. That is what makes working enjoyable, when it doesn’t feel like work.” MV

MN Valley Business • MAY 2017 • 17

Justin Roberts works long weeks and does it all to keep his mattress business successful.

No rest for Roberts

Mankato Mattress Man does it all By Dan Greenwood Photos by Pat Christman

here are more than a dozen stores in Mankato that sell mattresses. Justin Rober ts knew that to make it in a competitive market, he would have to find a way to stand out. That meant being the sole operator of his own store, named after him, the Mankato Mattress Man. “The thing that I do different is that I do everything myself,” Roberts said. “A normal business that would be my size

18 • MAY 2017 • MN Valley Business

would have employees.” The Jordan native and Mankato transplant is now celebrating his ninth year in business thanks to that approach. After years of working in sales, Roberts found that his experience selling exercise equipment included many of the things required for successfully running a business, from taking inventory to working with customers and coordinating deliveries.

Feature

Roberts knew deep down that he wanted to start his own business. When a former coworker jumped into the game, Roberts followed suit and opened his own furniture store. To make it a one person operation, he would need to narrow down what he sold and specialize in one area. The Mankato Mattress Man name came first; from there the choice was obvious. Plus, it’s a lot easier to move a queen sized mattress by yourself than say, a couch. “In this competitive market, you have to specialize in one thing or another unless you’re a huge store,” Roberts said. After several years working out of a warehouse on the backside of Cub Foods, he relocated to his current location on Riverfront Drive three years ago to increase visibility.

Long, satisfying days

He says that he’s able to keep prices down by doing nearly everything himself. That means running the store, delivering mattresses and coordinating deliveries to his warehouse at the old store location. But Roberts says his wife continues to help out even after they welcomed a new baby to the family six months ago. As many new businesses owners find out, however, there are struggles and self-doubt along the way. “There’s always a doubt when you’re starting a new business whether it’s the first few months or the first few years,” Roberts said. “You’re going into a market where there are always much larger established companies that you’re going against who have a lot more capital, and they can pump out better advertising.” But Roberts said those times of doubt were overshadowed by the faith that by selling the same product at a lower price, things would eventually work out. It just came down to being realistic about how fast those returns will come. “No matter what you’re doing you can’t expect to make too much money right out of the gate,” he said. “I knew that if I was willing to work 60 plus hours a week every single week, hopefully business could grow.”

Top: Justin Roberts keeps the frills to a minimum in order to have competitive prices. Bottom: Mankato Mattress Man is at 801 South Riverfront Drive in Mankato. That meant spending the m o r n i n g s d e l i v e r i n g mattresses, opening up the shop at noon and working there until six or seven at night. He often wraps up the business day by delivering more mattresses well into the evening. While doing nearly all of the work keeps overhead prices down, Roberts says it also allows him to develop a strong connection with his customers. Some of those customers have been willing to offer advice from their own experiences running local businesses. He also works to keep up with industry trends. “The more you grow the more trade shows you go to, you’re constantly talking to people and listen to what people are saying,” Roberts said. “It grows from there.” But in the end, getting the word out would be crucial. Roberts began placing ads in newspapers, on billboards and then doing radio commercials. Once he got his name out there, he produced television commercials. Pretty

soon people began to recognize him around town after watching him on TV. “My wife and I were walking the dog just yesterday and a guy was standing outside smoking a cigarette, I nodded at him and he said ‘Hey! You’re the mattress man!’” But it’s the recognition of his elder business peers who are often customers that Roberts appreciates the most. Some of his best conversations he has at the store come from an old timer who commends him for his hard work. “That’s probably my greatest compliment; when I get a customer who’s had a business or worked hard his whole life and can appreciate a younger generation doing it.” MV

MN Valley Business • MAY 2017 • 19

Thank You Greater Mankato. Proud to Serve You.

Business and Industry Trends ■

TH AN K YO U

Energy www.cbfg.net #CBThanksYou

Voted One of the Top Three Banks in Mankato

TOP PRODUCING BANK

TOTAL BUILDING CONTROL

Paape Distributing Company • Paape Energy Services • Paape Security Services MANKATO: 507-345-4828 • ROCHESTER: 507-289-4874

www.paape.com 20 • MAY 2017 • MN Valley Business

Oil imports rising

Gross U.S. crude oil imports in 2016 rose to an average of 7.9 million barrels per day, 514,000 barrels per day more than the 2015 average, according to the Energy Information Administration. Net crude oil imports increased by a smaller amount (460,000 b/d), as U.S. crude oil exports rose despite a decline in U.S. crude oil production. From a longer term perspective, gross crude oil imports in 2016 were still 22 percent lower than their 2005 high of 10.1 million b/d. Crude oil imports have also been affected by other major changes since 2005, when the United States was the world’s largest net importer of refined products and crude oil. In 2016, the United States was the world’s largest net exporter of refined products, with a significant portion of crude oil input to U.S. refiners supporting those exports. Canada continued to be the largest source of U.S. crude oil imports in 2016, providing a record 3.3 million b/d, or 41 percent of total U.S. imports — more than all Organization of the Petroleum Exporting Countries (OPEC) combined. Among nonOPEC suppliers, 2016 marked the seventh consecutive year of increasing crude oil imports from Canada and the sixth consecutive year of decreasing crude oil imports from Mexico. Imports from Mexico have declined.

Coal use edges up

Total U.S. electricity generation from utility-scale plants averaged 11,140 gigawatthours per day in 2016. Forecast generation declines by 0.7 percent in 2017 and then grows by 1.9 percent next year. The share of U.S. total utility-scale electricity generation from natural gas should fall from an average of 34 percent in 2016 to 32 percent in 2017 as a result of higher expected natural gas prices. The natural gas share of generation is then expected to rise slightly to 33 percent next year. Coal’s forecast generation share rises from 30 percent in 2016 to average 31 percent in 2017 before falling back to 30 percent in 2018.

Renewable power to rise

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2015 - 2016 701 874

1500 1200 900 600 300

Nonhydropower renewables are forecast to provide 9 percent of electricity generation in 2017 and 10 percent in 2018. The generation share of hydropower is forecast to be relatively unchanged from 2017 to 2018 at 7 percent, and the nuclear share of electricity generation declines slightly from almost 20 percent in 2017 to 19 percent in 2018.

Sales tax collections Mankato

Solar grows fast

600

Wind energy capacity at the end of 2016 was 81 gigawatts. EIA expects capacity additions in the forecast will bring total wind capacity to 95 GW by the end of 2018. On a percentage basis, solar power is expected to be the fastest growing renewable energy source in the forecast period, with total utility-scale capacity increasing by 44 percent from the end of 2016 to 31 GW at the end of 2018. With that level of growth, solar is expected to account for 1.4 percent of total utilityscale electricity generation in 2018.

CO2 down, then up

After declining by 1.9 percent in 2016, energyrelated carbon dioxide (CO2) emissions are projected to decrease by 0.2 percent in 2017 and then increase by 1.6 percent in 2018. Energy related CO2 emissions are sensitive to changes in weather, economic growth, and energy prices.

Crude production rises

U.S. crude oil production averaged an estimated 8.9 million barrels per day in 2016. U.S crude oil production is forecast to average 9.2 million barrels per day in 2017 and 9.7 million in 2018. EIA forecasts Brent crude oil prices to average $55 per barrel in 2017 and $57 in 2018. West Texas Intermediate (WTI) crude oil prices are expected to average about $1 less than Brent prices in the forecast.

Natural gas production up

U.S. dry natural gas production is forecast to average 73.7 billion cubic feet per day in 2017, a 1.4 Bcf/d increase from the 2016 level. This increase reverses a 2016 production decline, the first annual decline since 2005. Natural gas production in 2018 is forecast to rise by an average of 4.1 Bcf/d from the 2017 level.

Source: Sales tax figures, City of Mankato

(In thousands)

- 2015 - 2016

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

$427 $425

500 400 300 200 100 0

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato - 2015 - 2016 70000

$56,559 $52,400

52500 35000 17500 0

Source: City of Mankato

Mankato food and beverage tax - 2015 - 2016 175000 140000

$58,935

105000

$57,100

70000 35000 0

Source: City of Mankato

C. Sankey

MN Valley Business • MAY 2017 • 21

■

Agricultural Outlook

By Kent Thiesse

Tight income last year, but farm balance sheets still strong F or the second year in a row, 2016 featured record corn and soybean yields for many producers, relatively low crop and livestock prices, and very modest average net farm income levels in Southern Minnesota. The Farm Business Management Summar y was recently released by the Farm Business Management instructors and includes an analysis of the business records from farms of all types and sizes in southern and western Minnesota. This annual summary is probably one of the best gauges of the profitability and financial health of farm businesses. Following are some of the key points:

Background Data

5-YEAR FARM BUSISNESS MANAGEMENT COMPARISON

Farm Income Data Gross Farm Sales Total Farm Cash Expense Ave. Net Farm Income Top 20% Net Farm Inc. Low 20% Net Farm Inc.

2012 $900.988 $700,646 $272,544 $754,564 $14,456

2013 2014 $941,264 $925,932 $741,773 $776,714 $73,678 $96,337 $312,360 $435,495 ($98,582) ($108,265)

2015 2016 $840,341 $791,868 $724,501 $683,894 $37,070 $46,742 $233,138 $228,906 ($128,435) ($98,776)

Financial Ratios (Ave.) Operating Profit Margin 28.5% 7.4% 10.1% 2.5% 4.4% Current Ratio 250% 198% 179% 164% 162% Farm Debt/Asset Ratio 42% 40% 43% 45% 45% Term Debt Coverage Ratio 363% 102% 133% 77% 90% Crop Data --- Corn (Cash Rent Land) Yield/Acre 177 170 164 206 205 Price/Bushel $6.49 $4.53 $3.98 $3.54 $3.37 Direct & Ovhd. Costs/A. $836.74 $899.94 $864.21 $793.3 $760.67 Cost/Bushel Produced $4.72 $5.30 $5.28 $3.85 $3.71 Net Return/Acre +$343.33 ($14.16) ($51.26) ($55.26) ($73.90)

• A total of 1,380 farms from throughout south central, southwest, southeast, and west central Minnesota were included in the 2016 summary. Crop Data --- Soybeans (Cash Rent Land) • The average farm size was 693 Yield/Acre 50 47 47 60 61 acres. The top 20 percent net Price/Bushel $13.74 $12.62 $10.21 $8.63 $9.40 income farms averaged 1,137 Direct & Ovhd. Costs/A. $506.22 $534.35 $532.59 $518.64 $503.22 acres, while the bottom 20 Cost/Bushel Produced $10.06 $11.36 $11.33 $8.63 $8.21 percent Net Income farms were also above the average at Net Return/Acre +$205.20 +$78.07 +$4.2 +$6.99 +$76.34 888 acres. • 54 percent of the farm Livestock Data --- Net Return Over Expenses operations were cash crop Dairy – Per Cow +$879.09 +$92.31 +$1,249.20 +$289.48 +$108.61 farms, 17 percent were single Beef Cow – Per Cow +$88.27 ($48.71) +$340.23 +$117.23 ($71.57) entity livestock operations, Beef Finishing–Per Cwt. +$4.40 +$10.30 +$57.76 ($46.01) ($11.06) with the balance being various Hog Finishing–Per Cwt. +$1.46 +$0.84 +$15.03 ($0.43) ($2.00) combinations of crop, livestock, and other enterprises. NOTES : Data based on the averages of over 1,380 farms in the Southern MN FBM program. • 372 farms (27%) were under Net Returns for crops and livestock are before labor & management charges. $250,000 in gross farm sales in Crop net returns include crop insurance and farm program payments. Table developed by Kent Thiesse 2016; 330 farms (24%) were 22 • MAY 2017 • MN Valley Business

between $250,000 and $500,000 in gross sales; 354 farms (26%) were between $500,000 and $1 million in gross sales; and 324 farms (23%) were above $1 million in gross sales. • In 2016, the average farm business received $19,150 in government farm program payments, representing approximately 41% of the average 2016 Net Farm Income, which compares to nearly 85% in 2015. The larger farm program payments are due to lower crop prices in recent years. • The average family living expense in 2016 was $71,026, which compared to $58,037 in 2015, with a large portion of the increase related to medical expenses and health insurance costs. The average non-farm Income in 2016 was $24,352, compared to $39,527 in 2015. • In 2016, the average farm business spent $844,795 for farm business operating expenses, capital purchases, and family living expenses. Most of these dollars were spent in local communities across the region, helping support the area’s overall economy.

Financial Analysis (Refer8to the related table.)

The average net farm income for 2016 was $46,472, which6 was 25% above the 2015 average net farm income of 37,070; however, 2016 was the second lowest4 net farm income level in the past decade. Both the gross farm income and the total farm expenses declined by about 6 percent from 2015 to 2016. The 2 2016 average gross income is approximately 6 percent lower0 than the 2011 average gross income; however, J expenses F M Awere M about J J3 percent A S higher O N than D 2016 cash 2011. • The net farm income is the return to labor and management, after crop and livestock inventory adjustments, capital adjustments, depreciation, etc. 8 have been accounted for. This is the amount that 100 remains for family living, non-farm capital purchases, 6 income tax payments, and for principal payments 85 on farm real estate and term loans. 4 • As70usual, there was large variation in net farm income in 2016, with top 20 percent profitability 552 averaging a net farm income of +$228,908, farms and the low 20 percent profitability farms averaging 400 a negative Nearly J Fnet Mfarm A income M J ofJ($98,728). A S O N 40 D percent of the farm operations showed a negative 25 J net F farm M income A M for J 2016. J A S O N D average • The average farm business in 2016 had profit margins and a current ratio that were about steady with 2015 levels, primarily due to crop yields that were 100 well above average in most areas. The average debt-to-asset ratio has been increasing in recent 85 with more rapid increases in the lower profit years, farms 70 which are signs of a much tighter farm economy. The farm term debt coverage ratio in 2015 55 and 2016 dropped below 100%, which means that the average farm operation did not generate 40 enough net farm income to cover the principal and interest payments on existing real estate and term 25 J had F Mto use A M J J capital A Sor O N D loans, and working non-farm income sources to cover the difference.

Agriculture/ Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2016 — 2017

$3.18

16 12

2 0

$3.16

Source: USDA

Soybean prices — southern Minnesota

(dollars per bushel)

— 2016 — 2017 208 100 166 85 $8.62 12 470 8 255 $8.45 4 40 0 0 J F M A M J J A S O N D 25 J F M A M J J A S O N D J F M A M J J A S O N D Source: USDA

Iowa-Minnesota hog prices

185 pound carcass, negotiated price, weighted average

— 2016 — 2017

20 100 25 16 $63.34 85 22 12 70 19 8 55 16 $57.95 4 40 13 0 J F M A M J 25 10 J F M A M J J F M A M J Source: USDA

Milk prices

25 22 19 16 13

J J J

A A A

S S S

O N D O N D O N D

Minimum prices, class 1 milk Dollars per hundredweight

— 2016 — 2017 25 22

$18.32

19 16

$15.58

13 10

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

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

C. Sankey

MN Valley Business • MAY 2017 • 23

Construction/Real Estate Residential building permits Mankato

Residential building permits North Mankato

- 2015 - 2016 (in thousands)

18000

4000

13500

$452 $542

3000

$1,109 $5,226

9000

2000

4500

1000

Source: City of Mankato

Source: City of North Mankato

Information based on Multiple Listing Service and may not reflect all sales

Existing home sales: Mankato region - 2015 - 2016

Median home sale price: Mankato region - 2015 - 2016 (in thousands)

250

300

143

240

$143,000

200

132

$145,350

150

180

100

120

Source: Realtors Association of Southern Minnesota

Source: Realtor Association of Southern Minnesota

Interest Rates: 30-year fixed-rate mortgage

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

Housing starts: Mankato/North Mankato

— 2015 — 2016

- 2015 - 2016

5.5

5.0 4.5

4.1%

4.0 3.5

4.0%

3.0

Source: Freddie Mac

Commercial building permits Mankato

Commercial building permits North Mankato

- 2015 - 2016 (in thousands)

18000

4000

$2,227

13500

3000

$1,119

9000

$202 $1,211

2000

4500 0

Source: Cities of Mankato/North Mankato

1000 J

Source: City of Mankato

24 • MAY 2017 • MN Valley Business

Source: City of North Mankato

D C. Sankey

Bottom Line

Gas Prices

Gas prices-Mankato

— 2016 — 2017

54 43 $2.30

32 21 10 0

A $1.89 M

Gas prices-Minnesota

— 2016 — 2017

5 54 43

$2.31

32 21 10

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

$1.91

C. Sankey

Source: GasBuddy.com

Overall, net returns from both crop and livestock operations were positive for a majority of farm operators in 2016, but net returns were also negative for an increasing number of producers. Fortunately, the record 2016 crop yields for many crop producers helped offset the low crop price levels in 2016, and livestock profit margins started to improve later in the year. The overall average financial health of the FBM farm businesses remained fairly strong in 2016; however, there are some caution flags on the horizon, with the lower working capital, increased debt-to-asset ratios, and the extremely tight term debt coverage ratios. Complete farm management results are available through the U of M Center for Farm Management FINBIN Program at: http://www.finbin.umn.edu/

Stocks of local interest Archer Daniels Ameriprise Best Buy Crown Cork & Seal Consolidated Comm. Fastenal General Growth General Mills Hutchinson Technology Itron Johnson Outdoors 3M Target U.S. Bancorp Wells Financial Winland Xcel

March 14

April 10

$44.61 $130.60 $44.34 $53.76 $22.92

$44.61

$50.90 $22.98 $60.29 $4.00 $59.15 $34.93 $191.12 $54.84 $54.81 $40.00 $1.60 $43.20

$129.39 $48.75 $53.81 $23.54 $57.29 $23.26 $57.29 $4.00 $61.25 $34.95 $189.88 $53.53 $50.96 $49.75 $1.66 $44.49

Percent change +0.1% -0.9% +10.0% +0.1% +2.7% -5.0% +1.2% -5.0% 0.0% +3.6% -0.1% -0.6% -2.4% -7.0% +24.3% +3.7% +3.0% C. Sankey

MN Valley Business • MAY 2017 • 25

Minnesota Business Updates

■

■ 3M files patent suit 3M has filed a patent infringement lawsuit against Connecticut-based Amphenol Corp. The lawsuit alleges that certain Amphenol data transmission cable products infringe on two 3M patents, both labeled “Shielded Electrical Cable.” The 3M products are high-speed data transmission cables that the company says improve the reliability and efficiency of energy delivery in high-performance computing environments. According to the complaint, “Amphenol is now manufacturing, using, offering for sale and/or importing shielded ribbon cables (“Shielded Ribbon Cables”) into the United States that use 3M’s technology in direct competition with 3M.” The advantage of the 3M cables, the complaint states, are that they can be “bent at various angles without losing the integrity of the electrical signal.”

bowl of grains. The $3 million investment from General Mills’ 301 Inc. unit is Purely Elizabeth’s first funding round and General Mills is the sole investor, according to the Star Tribune. Granola is a popular product in the U.S. food start-up scene, but 301 Inc. believes Purely Elizabeth offers unique ingredients, taste and leadership under chief executive and founder Elizabeth Stein. General Mills has been making more investments in early-stage food companies to help them grow market share and improve business fundamentals while General Mills gains a potential leg up if the packagedfood giant wanted to acquire the brand down the road.

■ 3M makes major acquisition 3M Co. agreed to buy Scott Safety from Johnson Controls International in a $2 billion deal, forging another large purchase to bolster one of its

■ General Mills invests in granola General Mills is investing in Purely Elizabeth, a Boulder, Colo.-based maker of granola, oatmeal, muesli and cereal that uses more nutrient-rich ingredients than a typical

central businesses. The acquisition will add respiratory-protection products, thermal-imaging devices and other products for firefighters and industrial workers to 3M’s safety division, the company said. The move comes less than

Employment/Unemployment Initial unemployment claims Nine-county Mankato region Major November Industry ‘15 ‘16 Construction Manufacturing Retail Services Total*

640 473 63 2,996 1,475

Local non-farm jobs Percent change ‘14-’15

738 261 46 2,921 1,337

+15.3% -45.0% -27.0% -2.5% -9.4%

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.

Minnesota initial unemployment claims Major Industry Construction Manufacturing Retail Services Total*

November ‘15 ‘16 12,355 5,871 1,443 6,707 26,376

-1.7% -22.0% +2.7% -7.2% -7.3%

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.

26 • MAY 2017 • MN Valley Business

129,315

133000 122000 111000 100000

Minnesota Local non-farm jobs

Percent change ‘14-’15

12,141 4,599 1,482 6,220 24,442

- 2015 - 2016

Nine-county Mankato region

- 2015 - 2016

(in thousands)

2,924

3000 2000 1000 0

two years after 3M bought a safety business from KKR & Co. for $2.5 billion. The two deals are the largest in 3M’s 115-year history.

■ St. Cloud embraces river Many of St. Cloud’s businesses face away from the Mississippi River, which cuts through the heart of downtown. Now a group of city officials and local businesses and partners hope to change that, according to Minnesota Public Radio. They are looking to reconnect their city and its residents with the Mississippi by redeveloping a one-mile stretch of the riverfront from downtown north to St. Cloud Hospital. The riverwalk project would create a linear park along the Mississippi that would offer opportunities to get close to and even touch the river.

■ Xcel headquarters wins award Opus Group has won a Design-Build Institute award for industrial & office buildings for their Xcel corporate headquarters expansion in downtown Minneapolis. The nine-story office building’s contemporary aesthetic reflects the surrounding urban context and adds fresh design ideas. A skyway spanning Nicollet Mall connects the building with Xcel Energy’s current headquarters, and a second planned skyway will connect the building to a 253-unit luxury high-rise

apartment. Opus said the design-build process was instrumental in achieving success on the office expansion and delivering the project ahead of schedule in a challenging, congested urban environment.

Employment/Unemployment Local number of unemployed

- 2015 - 2016

Nine-county Mankato region

(includes all of Blue Earth and Nicollet Counties)

8000

4,841

6000

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

4000 2000 0

Mankato/North Mankato Metropolitan statistical area

2015

2016

2.2% 58,862 1,297

2.4% 57,441 1,439

Unemployment rates Counties, state, nation Minnesota number of unemployed

- 2015 - 2016

200000 150000

96,182

100000 50000 0

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

November 2015 2.2% 3.2% 3.6% 3.5% 2.8% 2.8% 3.1% 3.5% 4.1% 2.9% 3.1% 4.8%

November 2016 2.5% 3.2% 3.8% 3.7% 3.2% 3.2% 3.2% 3.3% 4.0% 3.0% 3.2% 4.4%

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

MN Valley Business • MAY 2017 • 27

Sponsored by the Carl & Verna Schmidt Foundation

A broader view of

sustainable investing

By Alex Veiga | Associated Press

eople who favor investing in a way that helps preserve the environment have more options than strictly focusing on companies that offer Earth-friendly products or services. Companies that make solar energy panels, electric vehicles or household products sourced from sustainable materials may fit the bill, but not necessarily offer attractive returns. Brown Advisory Funds’ Sustainable Growth Fund (BIAWX) keeps this in mind. It focuses on companies that are growing even as they use environmentally sustainable practices in their business or offer a service or product that helps other companies do the same. That means the fund has lots of big-name companies that one wouldn’t immediately think of as having a green or environmentally friendly focus, such as Amazon.com, UnitedHealth, Facebook and Visa. Karina Funk, co-portfolio manager of the fund, weighs in on how the fund is expanding the definition of environmentally conscious investing.

Explain what you look for when selecting companies for the fund.

The way to make money on companies that have sustainability characteristics is to start with fundamentally strong companies. A green or sustainability thesis is not a silver bullet for automatically making money or losing money. So there are three primary characteristics that we require in our portfolio companies: They must be fundamentally strong. They must have sustainable advantages. And we also must buy them at attractive valuations. With these criteria, we believe we find the management teams that are making the right investments in their own long-term sustainability, in their own economic self-interest, so they can compete

28 • MAY 2017 • MN Valley Business

and continue to be a part of our everyday lives for decades to come, and that is in line with our long-term investment approach. For us, sustainability is a means and not an end in and of itself. Our end goal is to invest in companies that will outperform the broad market.

How do you gauge whether a company’s investments in sustainable business practices make it a good fit for your fund?

We need to see evidence of sustainability adding value in very specific ways, either through stronger revenue growth and improved cost structure, which improves margins, or increased customer loyalty, or what we call enhanced franchise value. In terms of growing revenues faster, this could be by offering a product or service that helps customers reduce their cost of doing business by reducing or eliminating certain materials or equipment, saving on energy, saving on chemicals, water, inputs or outputs. In short, it’s about helping to drive productivity and efficiency for their customers and saving them money.

What’s a good example of a company whose product or ser vice fits this bill?

A.O. Smith. They make the highest efficiency water heaters on the market and for really high volume use cases, like hotels or hospitals, you can get a payback on energy savings alone in less than three years, and that’s really compelling for high-volume water users. So that’s an example of a product or service that has a compelling growth driver, because they improve productivity or efficiency for the end customers. MV

Sponsored by the Carl & Verna Schmidt Foundation

‘America First’ doesn’t have to mean ‘American Only’ 401k By Stan Choe | Associated Press

“A

merica First” is President Trump’s economic policy. But that doesn’t mean investors should set their 401(k) accounts to “America

Only.” Granted, the urge to dump all stocks from other countries is a tempting one, not to mention understandable. Foreign stocks have been stuck in their own lost decade, dragged down by weak economies and worries about politics, and their returns have been woeful relative to a U.S. market that’s set record after record. Add on top of that a president who made pulling out of a proposed Pacific trade deal one of his very first actions, and worries are rising that stocks outside the United States are in line for more struggles. Don’t give in to the temptation, many fund managers say. They acknowledge the disappointing run foreign stocks have been on, plus the challenges still ahead. But they’re sticking with the investment mantra to stay diversified: It’s riskier to go all-in on stocks from just one country, even if it is one as big and performing as well as the United States. Some managers also see stocks abroad as more affordable buys following the U.S. market’s run of dominance. And growth for the global economy seems set to begin accelerating again this year, which would help profits for companies around the world. Of course, the big caveat is whether protectionist policies emanating from Washington trigger a global trade war. If that were to happen, economies around the world and corporate profits would get hurt. But fund managers say they’re skeptical that campaign-trail rhetoric will turn into reality. It would hurt U.S. companies too. “The agenda may be getting people manufacturing jobs in Michigan, Illinois or Pennsylvania, but it’s not

clear to me that protectionism is good for America,” says Justin Thomson, manager of the T. Rowe Price International Discovery fund and the firm’s soon-to-be chief investment officer of international equities. “You just have to believe that common sense will prevail,” he says. “If you go tit-for-tat with trade embargoes, nobody is really a winner in that.” That’s one reason Thomson hasn’t made big changes to his International Discovery fund, which owns more than 200 stocks from around the world, even after Trump’s surprise victory in November. Thomson looks for smaller companies that look poised for strong growth, whether that’s because they sell to the expanding middle classes in emerging economies or export specialty items that are difficult to make. His investments range from Latin America – MercadoLibre, an online marketplace company, is one of his fund’s biggest investments – to Japan, where he’s seeing a greater emphasis on corporate governance. The fund’s 10-year returns rank in the top 12 percent of its category, but it hasn’t returned as much as U.S. stock indexes. At USAA Investments, foreign stocks look more attractive than their U.S. counterparts because they’re less expensive, says Wasif Latif, head of global multiassets. He just cautions investors to be patient with them. “International stocks are indeed very cheap,” he says. “Now, they can get cheaper or remain cheap in the short run, but in the longer run, history tells you that they will outperform.” MV

MN Valley Business • MAY 2017 • 29

The Greater Mankato Young Professionals program gives professionals ages 21-40 an opportunity to engage with one another while focusing on learning, socializing and community engagement.

ANNUAL PARTICIPATION INCLUDES • • • • •

Monthly social events Monthly professional development sessions Access to mentoring opportunities Networking luncheons Opportunities to serve on committees

24 + EVENTS PER YEAR

Greater Mankato Growth

UPCOMING EVENTS SOCIAL EVENTS May: MSU Climbing Wall June: Kayaking on the Blue Earth River July: Mankato MoonDogs Baseball Game August: Ribfest September: Foot Golf October: Bonfire & S’mores at Chankaska November: Maverick Hockey December: YP Holiday Party

PROFESSIONAL DEVELOPMENT EVENTS May: Tour of Mankato Waste Water Treatment Plant June: Learn About Opportunities to Get Involved in our Community July: Tour of the Guardian Energy Ethanol Plant in Janesville August: Business Professionalism and Etiquette September: Tour of Mankato Clinic - Gillette Children’s Center October: Finances for Your Future November: Tour of the Cambria plant in LeSueur

Also, join us for YP Wednesdays! This popular event is hosted by the YP Membership Committee on the second Wednesday of each month. It’s a great opportunity to dine and chat with your peers. For more information on on these events visit our website at greatermankato.com/young-professionals.

JOIN TODAY Annual participation in the program is just $25/month for Greater Mankato Growth members, Engaged level or higher, and includes all activities and events. Copper through Diamond level members may also receive credits towards the program fee.

30 • MAY 2017 • MN Valley Business

Community ille

Greater Mankato Growth

enter

MN Valley Business â&#x20AC;˘ MAY 2017 â&#x20AC;˘ 31

Growth in Greater Mankato RIBBON CUTTING

RIBBON CUTTING

Cricket Wireless Authorized Retailer 1757 Commerce Drive, North Mankato

Lil Bee’s Learning Center 1751 Bassett Drive, Mankato

Cavaliers

Cambria Gallery - Mankato River Hills Mall 1850 Adams Street, Suite 420, Mankato cambriausa.com/galleries/mankato/

Cavalier Calls on the Newest Greater Mankato Growth Members

Greater Mankato Rotary P.O. Box 63, Mankato mankatorotary.org

Greater Mankato Growth

Riddle’s Jewelry 1850 Adams Street, Suite 142, Mankato riddlesjewlery.com

32 • MAY 2017 • MN Valley Business

Oasis Services LLC 530 North Riverfront Drive, Mankato oasisserv.com

Skistad Consulting 46743 Melanie Drive, Madison Lake skistadconsulting.com

5:00 - 7:00 pm May 2 June 6 July 11 August 1 September 5 October 3 November 7 December 5

7:30 - 9:00 am

iSpace Environments & Tailwind Group KEYC News 12 and Fox 12 Mankato Unique Specialty & Classics Snell Motors Cambria MRCI - East Park Mayo Clinic Heath System Courtyard by Marriott Hotel & Event Center

May 17 June 21 July 19 August 16 September 20 October 18 November 15 December 20

Kato Insurance Agency Advanced Pain Management AT&T Blethen, Gage & Krause Ecumen Pathstone Living True Facade Pictures Old Main Village City of Eagle Lake

2017 Business Before Hours Sponsored by:

March Business After Hours hosted by Pub 500

March Business Before Hours hosted by Profinium, Inc.

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.

Presented By:

Each Thursday in June, 11:00 am - 1:00 pm Civic Center Plaza, Mankato

Admission is FREE

Lunch/snacks will be sold by a variety of local vendors Parking available throughout the City Center #KatoSongs

June 1 - City Mouse (Goodtime, Classic Rock, Americana, Blues, Country Rock, Rockytonk, Folk, Electric Bluegrass) June 8 - The Bad Companions (Rockabilly) June 15 - Sawyers Dream (70’s styled pop rock band) June 22 - The Whiskies (Acoustic Rock) June 29 - The Gentlemen’s Anti-Temperance League (Up-tempo, swing jazz)

2017 Sponsors:

Special thanks to: Verizon Wireless Center, City of Mankato, Children’s Museum of Southern Minnesota and Mankato Family YMCA

MN Valley Business • MAY 2017 • 33

Greater Mankato Growth

Greater Mankato Growth is proud to announce the 14th Annual Songs on the Lawn - featuring music, entertainment and local food

LOCAL FACES OF TRAVEL:

NATIONAL TRAVEL & TOURISM WEEK By Katie Adelman, Marketing and Communications Coordinator

he first full week of May is annually recognized as National Travel and Tourism Week, a tradition started in 1984. It began after the U.S. Congress passed a joint resolution in 1983 designating its celebration. Since its establishment, U.S. travel industry professionals observe this nationally-recognized week in many ways, ranging from local rallies to media outreach.

Look for this year’s award recipients in the attraction, hotel, restaurant and retail categories during National Travel and Tourism Week May 7-13 on Visit Mankato’s website at visitmankatomn.com/partners/travel-tourism-awards/. Stay tuned for videos of the Travel and Tourism Award winners on social media, too. Follow Visit Mankato on Facebook, Twitter and Instagram. And join in the conversation using the hashtag #NTTW17.

The theme for this year’s National Travel and Tourism Week is “Faces of Travel.” As part of the 34th annual National Travel and Tourism Week, Visit Mankato will recognize four of Mankato’s outstanding faces of tourism who make our visitors feel welcome and who advocate and support travel and tourism in Greater Mankato.

TRAVEL: BY THE NUMBERS

Greater Mankato Growth

$ $

One in nine American jobs depends on travel1

Blue Earth County travel industry supports 4,169 jobs2 1 According to the U.S. Travel Association in 2015 2 According to the Minnesota Department of Revenue in 2015 3 According to the Minnesota Department of Employment and Economic Development in 2015

34 • MAY 2017 • MN Valley Business

Travel generates $2.1 trillion for U.S. economy1 Blue Earth County travel industry generates $192 million in sales, $12.6 million in tax revenue and $55 million in wages3

NEW Sculptures coming to the City Center

MAY 13

right and early on the morning of Saturday, May 13, CityArt staff and volunteers will gather in the City Center to install 27 sculptures in the downtowns of Mankato and North Mankato for the seventh CityArt Walking Sculpture Tour. The sculptures will remain in place until April 2018 for the enjoyment of residents and visitors. This year, CityArt is joining with Mankato Downtown Kiwanis to celebrate the launch of the 2017 tour at the annual All You Can Eat Pancake Breakfast at the Loose Moose Saloon & Conference Center. From 9 am -1 pm, enjoy pancakes, ham, eggs, fruit salad, coffee and juice, while meeting CityArt artists and viewing pancake art. Free guided tours of the new sculptures will leave from the Loose Moose between 10 am and noon. Between May 13 and October 31, tourgoers are urged to vote for their favorite sculpture for the People’s Choice Award.

The winning piece will be purchased for permanent display in the City Center. In addition, sculptures on the tour are available for Stand for the Flag purchase or lease. For 2016 People’s Choice Award Winner more information visit citycentermankato.com/walking-sculpture-tour/purchaselease/ CityArt is a joint initiative of the City Center Partnership and Twin Rivers Council for the Arts to bring public art to the City Center. Since the program began in 2011, the Walking Sculpture Tour has brought almost $2 million in rotating public art to our public spaces and added 17 permanent works to our public collection. This program is made possible by more than 50 financial and in-kind sponsors who join together to give our community the gift of art.

Mankato Downtown Kiwanis & CityArt

All You Can Eat

PANCAKE BREAKFAST with 2017 CityArt Artists $8 8A ADULTS • $4 AGES 6-12 • FREE 5 & UNDER THE TH HE LOOSE MOOSE SALOON & CONFERENCE CENTER

119 9 S. Front Street, Mankato Fre ee Parking in the Civic Center Parking Ramp Free

Menu M

BLU BLUEBERRY U PANCAKES • PANCAKES • HAM EGGS EG G • FRUIT SALAD • COFFEE • ORANGE JUICE

mankatokiwanis.org

Activities A ct

• Meet M the 2017 CityArt Walking Sculpture Tour Artists in “Arty” Pancakes created by CityArt • Indulge In a ar artists at the Pancake Maker Space • Free F guided tours of the new sculptures, 10 am - Noon • Kids K Activities

cityartmankato.com

MN Valley Business • MAY 2017 • 35

Greater Mankato Growth

SATURDAY, SA A MAY 13, 9 am-1 pm

» G R E AT G OL F,

great meetings.

GOLF DIGEST EXECUTIVES KNOW GREAT GOLF and have named Renaissance Ross Bridge Golf Resort

»» Play where the champions play

& Spa and Auburn Marriott Opelika Hotel at Grand National two of their newest Editors' Choice Winners, along

on Alabama's Robert Trent Jones

with Pebble Beach, The Greenbrier, Pinehurst and 65 other North American locations. When you need to step

Golf Trail. To book your next outing,

away from the office for a great golf getaway or an off-site meeting, plan your visit to Alabama’s Robert Trent Jones Golf Trail. The best part about the Trail is you don’t have to break the bank to play world-class golf. »»

call 800.949.4444 today and visit rtjgolf.com to learn more.

Introducing Blethen Title Services & Blethen Exchange

EXPERIENCE | EXCELLENCE | EXPERTISE

Trust us to manage your residential or commercial real estate transactions!

507-345-1166

We act as a Qualified Intermediary when an investor wishes to sell and replace assets with like-kind property.

blethenlaw.com

Mankato, Minnesota

MN Valley Business â&#x20AC;˘ MAY 2017 â&#x20AC;˘ 37

Keep your employees healthy

From preplacement exams and DOT physical exams to OSHA medical surveillance and treatment of occupational injury, Mayo Clinic Health System offers the services you need to help keep your employees healthy and safe. • Occupational Medicine

• Health promotion programs

• Worksite wellness and education

Call 507-594-7370 to learn more.

mayoclinichealthsystem.org

MN Valley Business April 2017

MN Valley Business • MAY 2017 • 38