SALES/MARKETING
ECONOMIC DEVELOPMENT
Primary sector represents economic base pg. 18
Social media tips pg. 41
TECHNOLOGY
February 2011
Harnessing the power
pg. 43
MONEY
Bonus depreciation
LEADERSHIP
An attitude pg. 11
pg. 40
BIOTECH AGRICULTURE Hebron Brick Company – Hebron Brick Company pg. 16 Bricks across America Bricks across America pg. 16 ‘Low ‘Low stress’ stress’ in in Aberdeen Aberdeen pg. pg. 28 28
pg. 24
pg. 22
FINANCIAL SERVICES
pg. 20
CHANGE SERVICE SERVICE REQUESTED REQUESTED CHANGE PRSRT STD STD PRSRT U.S. Postage Paid Paid U.S. Postage Fargo, ND ND Fargo, Permit #684 #684 Permit
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PRAIRIE BUSINESS BUSINESS MAGAZINE MAGAZINE PRAIRIE PO BOX BOX 6008 6008 PO GRAND FORKS, FORKS, ND ND 58206-6008 58206-6008 GRAND
pg. 32
The Upper Midwest Midwest Chapter Chap pter of The Nati National ional Academy of Television Ar rrts ts & Sci S ciiences has award ded two Emmy A w ward Arts Sciences awarded Awards to Results Unlimited, 03 3 0)*(/0)*(/ 0 )*( -". )*( - ."3% ."3% % 03) 3) 40/!(-"3% 40/! 40/! !(-"3% ! (-"3% 0%(3+# &"-$ 1',+(. "3 2"31- 03) 0)*(/-"."3% Fargo/Moo oo orh orhead rhead head d.. The Emmys were awarded to Results Unlimited d Fargo/Moorhead. in th he cate ca ategorie eg go e of Short Form Photography Composition and the categories Ligh hting Co hting C omp ompos pos Lighting Composite, citing the agency for excellence in both of these categories in the th production of several television commercials. Results Un nlimite was the only advertising and marketing agency Unlimited in North D akota to be nominated for this year’s award, garnering ering Dakota an addition nal two nominations for Short Form Editing Composition sition additional and Total To otal Market ear ’s Marketing Campaign. The two Emmys from this year’s competitio n will make a total of three Emmys presented to Results sults competition Unlimited. In 20 ward 2006 Results Unlimited produced an Emmy award winning lo ng len long length video “Breath Of Heaven, Life of Hell” forr the W est Fargo o Polic ation West Police Department. These awards recognize dedication to excellen nce in television by honoring exceptional work by video excellence profession als. Re w has professionals. Results Unlimited was founded in 1999 and now over thirty media professionals on staff. In addition to the Emmy’s, my’s, Results Un nlimite has won 16 International Communicator Awards ward ard d ds Unlimited for excellen nce in video and print production. These awards provide ovid ov ovide id id excellence winners and an nd their the clients the recognition they deserve and gives communica ations and creative professionals proof and validation ation communications w is outstanding and highly regarded by their peers. rs. In that their work addition Re esults Unlimited has won 9 Telly Awards for excellence ce in Results
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FFARGO/MOORHEAD ARGO/MOORHEAD A 1111 1111 Westrac Westrac Dr, Dr Ste 108 | Fargo, ND 58103 | 701.281.3414 / 866.419.3414 MINOT 1324 20th Ave e SW | Minot, ND 58701 | 701.837.4949 / 800.361.3264
rresults-unlimited.com esults-unlimited.com -unlimited.com
CONTENTS
Volume 12 No. 2
6
From the Editor’s Desk
8
Women in Business
8
Matthew Mohr
10
Prairie News
11
Leadership Management: An Attitude
14
Prairie People
16
Company Spotlight: Hebron Brick Company Bricks across America In the past 10 years, Hebron Brick Company has increased its original capacity from 18 million bricks a year to more than 45 million bricks per year.
18
20
Economic Development: Primary sector represents economic base Cover Story:Financial Services Tight market slowly improving Although lenders are still seeing a tight economic market, both North Dakota and South Dakota SBAs have seen some sort of record years in lending funds to small businesses.
22
Cover Story: Agriculture Exporting is big business Experts are finding that exporting agricultural products out of our region is not as challenging as initially thought.
24
Cover Story: Biotech Biotech cluster = economic development? With a significant agricultural presence, there are signs of a biotechnology cluster taking shape in pockets of
32
Energy Additional refinery needed?
36
Energy Ethanol: Let the market dictate
39
Energy in the News
As North Dakota oil production hits new records every month, the talk of building additional refineries within the state to process that fuel also grows.
Minnesota, North Dakota, and South Dakota.
28
Community Profile: Aberdeen, SD Low stress’ in Aberdeen Aberdeen is using recent success to build momentum for the future.
40
Money: Bonus depreciation is back with a bang
40
Entrepreneurship: The new buzz in rural economic development
41
Sales and Marketing: Social media tips for all stages
42
Viewpoint
43
Technology: Harnessing the power of a connected world
46
By the Numbers
4 Prairie Business
February 2011
Many of those in the ethanol industry are asking just one thing: let the market dictate what consumers purchase.
Next Month In March, Prairie Business magazine will discuss topics involving Marketing, Higher Education, and Business Law.
On the air Join Prairie Business magazine Editor Alan Van Ormer and host Merrill Piepkorn on Tuesday, February 8 at 3 p.m. on any Prairie Public radio station to hear more about the February cover story. To listen to Prairie Public, visit www.prairiepublic.org/radio/hear-it-now.
On the cover Neal Fisher, Administrator, North Dakota Wheat Commission (photo by BigAim Photo – Bismarck, ND) Mike Jerstad, Partner, PrairieGold Venture Partners (photo by Brian Rupert, 44interactive) Scott Swanholm, Partner, Eide Bailly, LLC (photo by Legacy Photography – Fargo, ND)
From the editor’s desk
For daily business news visit prairiebizmag.com
An SBA Award Winning Publication
Developing opportunities Who says there is a slowdown in our region? eveloping biotech clusters, increased SBA loans, and record ag exports highlight the February issue of Prairie Business magazine. I’m sure there are economic issues around the nation, and even in this region. However, after talking to those who work with biotechnology, commercial loans, and ag exports, there continues to be opportunities in North Dakota, Minnesota, and South Dakota. Both North Dakota and South Dakota SBAs have seen some sort of record years in lending funds to small businesses. In South Dakota, export numbers are expected to exceed the 2009 figures in 2010, while in North Dakota the latest economic impact study indicates a positive economic impact of an annual North Dakota wheat crop at $7.0 billion. As you will read in these three cover stories there is some positive business aspects occurring, but many are also cautious about what could occur in the future. And I’m sure that is what makes this region special; business leaders are cautiously looking to develop opportunities. Heading into 2011, the staff at Prairie Business magazine is developing stories on our different cover series, as well as finding authors to write columns on our five different topics that we are unveiling this month. For this month, we added a sixth. In this issue, Scott Hasbrouck, a CPA and Shareholder with Brady, Martz & Associates, P.C., discusses bonus depreciation. In her column entitled, ‘The New Buzz in Rural Economic Development,’ Beth Pridday, the Director of Business & Entrepreneurial Services at M State, Detroit Lakes, elaborates on what she calls “entrepreneurial buzz.” In his piece on Leadership and Management, Chuck Chadwick, Business Liaison for the Greater Moorhead Development Corporation, asks the question: What is leadership and what does it look like? Kevin McKinnon, President, Greater Fargo Moorhead Economic Development Corporation, relates his thoughts on the primary sector company being the base of the region’s economy. Michael Pierce, Digital Media Strategist for Odney, provides our readers social media tips for all stages. Finally, Ian McPherson, Vice President-Sales and Marketing for Pedigree Technologies, talks about harnessing the power of a connected world. PB There you have it – our first set of topic columns of 2011.
D
Mike Jacobs, Publisher Alan Van Ormer, Editor Scott Deutsch, Sales Manager Tina Chisholm, Production Manager Beth Bohlman, Circulation Manager Kris Wolff, Layout Design, Ad Design
NATIONAL ACCOUNT SALES/GENERAL MANAGER:
Scott Deutsch
701.232.8893 Grand Forks/Fargo/Moorhead/northwestern MN
SALES:
Brad Boyd
800.641.0683 Bismarck-Mandan/ west central ND/north central SD
John Fetsch
701.232.8893 Fargo/Moorhead/eastern ND/western MN
Jeff Hanson
605.212.6852 Sioux Falls/southern SD/southern MN
EDITOR: Alan Van Ormer Editorial Advisors:
701.232.8893 avanormer@prairiebizmag.com
Dwaine Chapel, Executive Director, Lake Area Improvement Corporation; Bruce Gjovig, Director, Center for Innovation; Lisa Gulland-Nelson, Communications Coordinator, Greater Fargo Moorhead EDC; Dave Haan, Director of Public Relations and Digital Development at Lawrence & Schiller; Dusty Johnson, Chief of Staff for South Dakota Gov. Dennis Daugaard’s office; Brecca Kramer, General Manager of Odney; Matthew Mohr, President/CEO, Dacotah Paper Company; Nancy Straw, President, West Central Initiative Prairie Business magazine is published monthly by the Grand Forks Herald and Forum Communications Company with offices at 808 3rd Ave. S., Ste. 400, Fargo, ND 58103. Qualifying subscriptions are available free of charge. Back issue quantities are limited and subject to availability ($2/copy prepaid). The opinions of writers featured in Prairie Business are their own. Unsolicited manuscripts, photographs, artwork are encouraged but will not be returned without a self-addressed, stamped envelope.
Subscription requests: Free subscriptions are available online to qualified requestors at www.prairiebizmag.com.
Address corrections: Prairie Business magazine PO Box 6008 Grand Forks, ND 58206-6008 bbohlman@gfherald.com
Online: www.prairiebizmag.com
6 Prairie Business
February 2011
LEEDing the way in
Education Innovation
®
LEED Silver means GREEN for UND and North Dakota
A new day is dawning for the Education Building at the University of North Dakota. Originally built in the 1950s, the building was little changed until last summer. Thanks to Stimulus funding appropriated by the North Dakota Legislature, a renovation and expansion of UND’s Education Building is setting the standard for merging efficiency, environmental protection, and educational impact. The LEED® Silver-certified project has been designed for optimized energy efficiency. That means, in part, the renovated and expanded building will use 24 percent less energy than other buildings of comparable size and type. More energy efficiency means better stewardship of state resources, lower water use, environmental protection, and improved climate controls for comfort and economy. If you would like to partner with us on this groundbreaking project, please contact Dan Rice, Dean of the UND College of Education and Human Development, or Jena Pierce, Director of Development, at 701-777-2674. To learn more about the project, visit our Web site at:
The LEED® Green Building Rating System TM is the national benchmark for design, construction and operation of high-performance “green” buildings. It promotes a whole-building approach to sustainability. Visit the U.S. Green Building Council’s Web site at www.usgbc.org to learn more about LEED rankings and standards. (Renderings courtesy of JLG Architects Ltd., Grand Forks)
www.edbuilding.und.edu 701-777-2674
Creative. Innovative. Entrepreneurial. Spirited. AN EQUAL OPPORTUNITY/AFFIRMATIVE ACTION INSTITUTION
The College of Education and Human Development is proud to be working on the project with these North Dakota businesses: JLG Architects
AE2S Engineering Heyer Engineering Obermiller Nelson Engineering Grand Forks Heating Air Conditioning Bergstrom Electric
Peterson Construction
Women in business
Part-time opportunity springboard to success
TAMMY MILLER CEO, Madison Community Hospital
hile attending Dakota State University in Madison, SD, Tammy Miller had an opportunity to work at the Madison Community Hospital on a part-time basis. This turned out to be a springboard for a career in the health care industry. Now, she is the CEO of the Madison Community Hospital. Miller graduated from Clark High School in Clark, SD, before attending DSU where she received an Associate Degree in Office Management in 1978 and later a Bachelor’s Degree in Business Administration and Business Education in 1987. She received her Master’s Degree in Healthcare Administration from the University of Minnesota in 1997. After graduation, she became the administrative assistant for Madison Community Hospital until 1994, where she became the CEO at the Dell Rapids Hospital in Dell Rapids, SD. Since 1996, Miller has been Chief Executive Officer with the hope of making the hospital a viable facility that
W
meets the health and wellness needs of the community heading into the future. So far, Miller says that the hospital has had a significant impact in the region, which not only includes Madison and Lake County, but several counties around the community. “Our hospital is designated as a critical access hospital because it is the only hospital in the county and is nearly 35 miles from the nearest facility,” she explains. “Our service population is approximately 15,000 with projected growth over the next 10 years.” There are eight physicians and three physician extenders in the community. One of the major challenges for the Madison Community Hospital system is complying with everchanging regulations, Miller states, adding that reimbursement challenges, retention of quality staff, and maintaining volume in a small community, are just a few of the other issues that are being addressed on an ongoing basis. PB
Business Advice
New markets xtending your business into a new market is exciting, challenging, and can be rather risky. Looking at the possibility of enhanced sales in a new market, either geographic or market segment can be very exciting. If a business enjoys a certain market share in their current geographic area, extrapolating this share to a new market often creates big numbers and the prospects of new sales and profits in a new market is thrilling to consider. Unfortunately, achieving the sales and profits are often a lot harder than they initially appear. Customers have allegiances already established. Business methods may be different; the cost of people, inventory, plant, property and equipment can be a huge drain on resources. Although it is exciting to go to a new market, taking on such a challenge is far from easy. It is normal for a business which desires to grow to look for new avenues to sell products. We see this happen every day. Today, nearly every grocery store has an in-house deli offering take-home prepared foods. Although this seems natural and normal today, it was not a standard practice many years ago. To understand this new business grocers needed to allocate floor space; a difficult decision when floor space is a premium and every inch of shelf must bring in revenue. New equipment and special supplies were purchased and, in many cases, more employees were added to serve customer needs. For a grocery, deli business is almost a
E
8 Prairie Business
February 2011
MATTHEW D. MOHR mmohr@dacotahpaper.com.
business requirement today, but it started as a new market segment expansion and although it has been very successful for most, some grocery stores did fail in the deli business. Over the years, many regionally based banks have added operations in Arizona. With customers spending winters in warmer climates, often looking for banking services, the idea of serving Arizona markets is very alluring and seems a natural place to expand. Arizona is a high growth area. Customers already exist, and it should be a reasonable risk. Many North Dakota banks which have ventured into Arizona discovered the banking business in Arizona to be much tougher than they anticipated. After fighting for good employees, spending hours trying to manage credit, and facing huge profit drains (losses in many cases), many decided the risks of geographic expansion to Arizona were not worth the rewards and pulled out of the market, or were forced to leave. Yet, despite this shaky history, banks from our area continue to be lured to the market. Some do succeed and show good returns for their efforts, others face losses and failure like those who tried and failed in the past. When deciding to take on the challenge of a new market, a business owner should review the historical success of similar endeavors by his competitors, and assess all of the challenges, as well as the possible risks involved PB with the expansion.
Prairie News
Press releases and photos about business news and events in North Dakota, South Dakota and western Minnesota can be e-mailed to avanormer@prairiebizmag.com for consideration
high-level products and services from the same innovative and creative Meridian staff they have worked with and come to expect for the past 12 years.
STATE BANK & TRUST COMPLETES PURCHASE OF BELL MORTGAGE State Bank & Trust of Fargo has purchased Bell Mortgage, a 130-year-old mortgage company based in Minneapolis. The purchase combines the largest independently owned bank in Minnesota, North Dakota and South Dakota with the tri-state area’s largest private mortgage company. Bell Mortgage is retaining its company name and is now a division of State Bank & Trust. Bell’s lenders, locations, and management team remain the same and former Bell owner Gary Kirt is staying on as president of the bank’s Bell Mortgage division. Since it was founded in 1880, Bell Mortgage has funded more than half a million home mortgages, including $10 billion in mortgages in the last decade alone. State Bank & Trust will now be offering home equity loans, construction loans, and other home mortgage services to Bell’s customers.
R&D CENTER UNDERWAY IN CANTON A 65,000 square foot research and development facility is set to be constructed at Adams Thermal Systems in Canton, SD. Adams Thermal Systems is one of the nation’s largest manufacturers of engine cooling systems for vehicles. The new Center will also house corporate headquarters for Adams Thermal Systems, which has locations in Europe, China and soon South America, as well as Cedar Falls, Iowa. Being constructed with a total investment in building and capital equipment of approximately $10 million, the center will house 50 new employees and will be completed by fourth quarter, 2011. Adams Thermal currently occupies 250,000 square feet of manufacturing and distributing space, employing 450 at their Canton location.
PARTNERSHIP ASSISTS NORTH DAKOTA MANUFACTURING COMPANIES Dakota Manufacturing Extension Partnership (MEP) and the North Dakota State University (NDSU) College of Engineering and Architecture are developing a partnership to assist small- to medium-sized manufacturing companies in North Dakota. This partnership is expected to develop stronger synergies with the Dakota MEP – who also has been developing manufacturing companies and the manufacturing industry in North Dakota at the core of their mission. The goal of the partnership is to help companies make improvement and to realize quantifiable benefits and impacts as a result.
MERIDIAN ENVIRONMENTAL TECHNOLOGY JOINS ITERIS Meridian Environmental Technology, Inc., a privatelyheld company based in Grand Forks, ND, announced it has signed a Stock Purchase Agreement to be acquired by Iteris, Inc., a leader in traffic management focused on the development and application of advanced technologies. Meridian will operate as a wholly-owned subsidiary of the Iteris Family. MET customers will continue to receive 10 Prairie Business
February 2011
MORE JOBS AND INCREASED REVENUE
According to a U.S. Chamber of Commerce Report, North Dakota has the highest income and job growth over the last decade. The state has seen
42% job growth in professional and technical services and
36% in Management of companies since 2002
The total number of jobs in the NDSU Research & Technology Park jumped more than 74 percent over the past five years, according to a report by an independent economic impact firm. The report also states that the park positively impacts economies, helps create jobs, and helps generate revenue for local and state governments. By 2011, out-of-state revenues flowing to businesses in the Park are expected to have grown 74 percent, and international revenues will likewise have grown 77 percent. The Idaho firm, Economic Modeling Specialists, Inc., (EMSI), examined a range of economic indicators to analyze the NDSU Research & Technology Park’s performance from 2007 to 2010, with projections for 2011.
CENTER FOR RURAL ENTREPRENEURIAL STUDIES STARTING The U.S. Department of Education has awarded a $550,000 congressionally-directed grant to the University of Minnesota, Crookston to establish the Center for Rural Entrepreneurial Studies (CRES). While additional financial support may be sought, currently, 100 percent of the funding will go directly to financing the CRES. The Center is housed in Dowell Hall. The university is known for its strong history of supporting innovation and entrepreneurship in the region. The CRES will expand connectivity to the region’s educational institutions, economic development organizations, and financial institutions, as well as to state and federal small business support agencies and aspiring entrepreneurs in Northwest Minnesota. The CRES will engage the students, faculty, and research facilities on the Crookston campus in order to stimulate the entrepreneurial culture and strengthen the economic vitality of Northwest Minnesota.
NORTH DAKOTANS ASKED TO TAKE THE ‘SWITCH’ CHALLENGE North Dakotans are being challenged to switch their thinking, to pledge to take small actions that can create a big impact with energy savings. The challenge is part of the NDSwitch campaign funded by the American Recovery Reinvestment Act funds and developed by the North Dakota Department of Commerce to give North Dakotans tools and information to help conserve energy and save money. The campaign includes an online challenge (www.NDSwitch.com) where residents can immediately calculate the benefit of energy-saving actions and add their savings to the North Dakota total. In addition to the Switch challenge, the NDSwitch website contains an online learning center (www.ndswitch.com/learningcenter.php) that features a full curriculum for K-12 teachers with downloadable lesson plans. This resource was introduced to North Dakota teachers at the North Dakota Education Association conference this fall.
Leadership
Leadership: An attitude lmost more has been written about leadership than any other topic. It is difficult to add new insights after millions of words have been written about leadership. However, each year more books and articles are published because it is such an important and crucial component of business success. Therefore, perhaps it would be beneficial to return to the basics: What is leadership and what does it look like?
A
Leadership What does it look like? At the very core of the subject, Dwight D. Eisenhower stated, “Leadership is the art of getting someone else to do something that you want done because he wants to do it.” Following this idea, selling is the core function of leadership. In the world of business, sales drive the ability to survive and thrive and are essential to remain in business. Regardless of the leadership style, and there are many, an effective leader must gain the willing cooperation of others to produce sales and results. One common leadership definition is “getting things done through people.” The essence of business success is to develop an organization that each and every employee regardless CHUCK of title or job CHADWICK function represents Business Liaison, the company in a Greater Moorhead favorable light and Development Corporation has a keen interest lets.talkbusiness@yahoo.com in it to succeed. PB
Let’s build a relationship, and your business. Let’s meet. Then let’s get to work. At Bremer Bank, it starts with getting to know you and your business. Finding opportunities that fit. Putting them together into a solid plan. Let’s take action. Your business. Our bank.
Call 1-800-908-BANK or visit Bremer.com.
Member FDIC. ©2011 Bremer Financial Corporation. All rights reserved.
prairiebizmag.com
11
Prairie News
Press releases and photos about business news and events in North Dakota, South Dakota and western Minnesota can be e-mailed to avanormer@prairiebizmag.com for consideration
NEW CERTIFICATION STANDARD FOR UNMANNED AERIAL SYSTEMS PROGRAM
ANDERSON SEED COMPANY CUTS RIBBON AT REDFIELD FACILITY
Northland Community and Technical College is collaborating with the National Center for Aerospace and Transportation Technologies (NCATT) to develop a new certification standard for Northland’s world-class unmanned aerial systems maintenance program. NCATT is recognized by the aviation industry for its authority in the certification of avionics, radio communications, and navigation. A standard has not yet been established specifically for Unmanned Aerial Systems maintenance training. Northland College is working closely with NCATT to develop this standard, which will be offered to all aviation schools across the nation. Northland has taken the lead to become the first civil entity to create maintenance-training curriculum for unmanned aircraft, along with the national standard.
Anderson Seed Company, based in Mentor, Minn., opened the doors of its new Redfield facility. When construction started on the sunflower hulling and processing plant in the fall of 2010, it was estimated that the plant would bring 20 new jobs to the area. Today, that estimate has increased to 34. The jobs include mill operators, quality control positions, office staff, forklift operators, baggers and maintenance staff. The plant will have a 260,000-bushel capacity. After the hulling process, the sunflowers seeds take one of three paths: kernels for breads and other baked products, sunflower kernels for human snacks, or birdseed. The $3 million project was partially financed with a REDI Fund loan and the pooled-bond program administered through the Governor’s Office of Economic Development.
TEAM INDUSTRIES RECEIVES 10TH PATENT TEAM Industries was awarded its tenth patent (Patent no. 7,810,601), for an All Terrain or Utility Vehicle Having Selectable Drive Configurations and Method. This patent describes the electronics and control algorithm for TEAM’s SmartLocker™ Electronic Traction Control differential system which represents a breakthrough in traction control for light automotive, recreational, and off-road vehicles. The SmartLocker (also covered by US patent 7,278,945) provides an automotive type 4 wheel drive system that provides true all wheel drive automatically and on the fly. The SmartLocker is programmable and, with TEAM’s SmartLocker Automatic Electronic Disconnect (patent no. 7,591,355) will automatically select 2 wheel drive, 3 wheel drive, or 4 wheel drive as needed. On surfaces with good traction, a vehicle equipped with the SmartLocker system will stay in 2 wheel drive with a turf-friendly, easy steering, open differential. On slippery surfaces the system will detect the amount of slip and automatically decide whether to send power to the front wheels and decide how tight to lock the differential(s).
According to national statistics, the federal government buys more than $400 billion in goods and services every year. (Source: South Dakota Quarterly Economic Development Report)
Mobile application company, Snapp, is open for business in Sioux Falls, SD. Snapp concepts, designs and develops apps for the iPad, iPod and iPhone, as well as distributing, testing, promoting and maintaining the custom-designed apps. Mobile applications are quickly becoming a major source of information, entertainment and social connection. In fact, a recent Pew Internet Project study revealed that 43% of cell phone users download apps, only two and a half years after the Apple App store opened. The demand for apps in South Dakota is expected to jump dramatically with the announcement that the iPhone will now be available in South Dakota on both Verizon and AT&T (formerly AllTel) networks. 12 Prairie Business
February 2011
The Black Hills Neurology physician group and The Sleep Health Center have joined Rapid City Regional Hospital effective Jan. 1, 2011, with the shared vision of enhancing the quality and expanding the scope of neuroscience services. Clinic services will continue at the current Black Hills Neurology location but will be renamed Regional Medical Clinic – Neurology and Rehabilitation and Regional Sleep Health Center. Black Hills Neurology has been in operation for almost 30 years providing neuroscience services in Rapid City and at outreach locations in South Dakota, Nebraska, and Wyoming.
The SmartLocker provides an automotive type 4 wheel drive system that provides true
MOBILE APPLICATION COMPANY LAUNCHES IN SIOUX FALLS
RAPID CITY REGIONAL HOSPITAL ESTABLISHING COMPREHENSIVE NEUROSCIENCE PROGRAM
all wheel drive automatically and on the fly.
LAKE REGION STATE COLLEGE OFFERS FOURTH HEALTH INFORMATION TECHNOLOGY CERTIFICATE Lake Region State College, through a grant funded by the Office of the National Coordinator for Health Information Technology (Dept. of HHS), has added a fourth Health IT certificate of completion. In addition to the three certificates already offered which include Technical Software Support, Health IT Trainer, and Clinician/Practitioner Consultant, LRSC is now offering a Workflow Redesign Specialist certificate. Any one of the four certificates of completion offered will allow individuals to provide continuous support to Health IT, more specifically support of Electronic Health Records, as it is deployed in office practices, hospitals, health centers, long-term care facilities, health information exchange organizations and state and local public health agencies. The Office of the National Coordinator for Health IT identified workforce roles that require skilled professionals to support healthcare providers in the transition to electronic health records (EHRs), said Cindy Brown, manager of the Health IT program at LRSC.
Prairie People
Please e-mail photos and press release announcements of hirings, promotions, awards and distinctions received by business leaders in North Dakota, South Dakota and western Minnesota to avanormer@prairiebizmag.com for consideration.
SANFORD DEVELOPMENT AND RESEARCH HAS NEW CHIEF MEDICAL DIRECTOR
DR. MARIA BELL
Dr. Maria Bell, a leader of the Sanford Clinic Women’s Health in Sioux Falls, will have the additional responsibilities as Chief Medical Director for Sanford Development and Research. She will facilitate clinical and translational research for both the Sioux Falls and Fargo campuses by assisting physicians, researchers, and other providers in the development of their research ideas, as well as facilitating the implementation of their research protocols to improve patient care. Additionally, she will assist in the facilitation of undergraduate, graduate, and medical students into Sanford’s clinical and translational research.
BWBR ARCHITECTS NAMES NEW CFO
MICHAEL RANUM
CLEVELAND BECOMES PRESIDENT OF BANK IN GRAND FORKS
COREY CLEVELAND
Senior Vice President Corey Cleveland has been promoted to Grand Forks Bank President at Frandsen Bank & Trust. Cleveland grew up in East Grand Forks, MN and is a graduate of the University of North Dakota with a Bachelor of Science degree in Business Administration. He has also completed the American Banking Association National Commercial Lending School and has been a classroom instructor for the American Institute of Banking. He has served on the North Dakota Bankers’ Association Board of Directors from 20052009.
HEALTH PLAN LEADER NAMED
JASON HUBERS
MUTUAL OF OMAHA BANK ADDS EXECUTIVE
PATRICK McCLANAHAN
14 Prairie Business
Patrick McClanahan has joined Mutual of Omaha Bank’s Community Association Banc/CondoCerts division as a regional account executive in the Midwest region. Based out of St. Louis, McClanahan will work with association management companies in Missouri, Nebraska, Kansas, Arkansas, Iowa, North Dakota and South Dakota, providing bank products and services that benefit the management companies and the homeowners associations they serve. McClanahan brings more than 20 years of experience in territory management, sales and account management to Mutual of Omaha Bank. He most recently served as a field account executive for Allen Systems Group (ASG) in St. Louis, where he was a leader in developing new accounts and managing existing customer relationships. February 2011
Michael Ranum has been selected as the Chief Financial Officer for BWBR Architects, a regional design solutions firm. Ranum will direct financial and administration functions for the 110person firm. Ranum joined BWBR as manager of operations in 2007, a year before the architecture and design industry suffered one of its worst recessions in memory. While the firm did not escape the effects of the recession, Ranum and members of the executive committee prudently managed the firm’s finances and staffing to limit losses, and in the past six months the firm has bounced back to increase staffing by 10 percent and keep BWBR among the top five architecture and design firms in the region according to billings.
Jason Hubers has been named Sanford Health Plan’s Executive Vice President. Hubers has 30 years of experience in the insurance industry, including a focus on employee benefits and 16 years of retail sales in life insurance, health insurance and employee benefits. Over the last 14 years he demonstrated skill and expertise in wholesale insurance as president of Great Plains Brokerage, the sales branch of Sanford Health Plan.
TUESDAYS
are the most productive day of the work week!
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Company Spotlight
Hebron Brick Company
In the past 10 years, Hebron Brick Company CEO Rodney Paseka has seen the number of employees more than double.
Bricks across America Hebron Brick Company has made huge strides in the past 10 years. ince 2000, the company has increased its original capacity from 18 million bricks a year to more than 45 million bricks per year. In addition, Hebron Brick Company, headquartered in Fargo, ND, was able to build a 100,000 square-foot plant in Hebron, ND, to mine and process the clay deposits into bricks that are being used all over the country. “It is kind of fun,” says Rodney Paseka, CEO, Hebron Brick Company. In 1986, Paseka became CEO of a company that was started in 1904. The focus for selling bricks was 70 percent in the housing industry. That changed four years ago when the company re-oriented its business toward architectural products for commercial buildings. This included developing a new product line that has been used for a federal court house in New Jersey, the New York Yankees’ farm club stadium, and restaurant stops around Chicago. Today, the company has 11 locations throughout North Dakota, South Dakota and Minnesota and depends on 225 employees to do the job. Paseka will tell you that the plant in Hebron is the heart of the company and is the base for all the brick sales distributed to 40 states and throughout western Canada.
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16 Prairie Business
February 2011
An estimated 80 percent of the brick Hebron manufactures is distributed outside of North Dakota. Over the more than 100 years of operation, Hebron Brick has overcome bankruptcy, fire that destroyed the business, two World Wars, and the Great Depression. Now as the fourth owner of the company, Paseka had to make a strategic move or face closing and releasing employees. That was the need for a new plant in 1999. “It gave us the ability to make product,” he explains. ‘If we did not have that today, we would not be in the market.” Then there was a refocus of the business four years ago when the company looked at the industry and market, realizing that the housing industry was becoming commoditized. Hebron Brick refocused by becoming more of a job-oriented shop that became more specialized in dealing with different colors and sizes for commercial jobs. Paseka said those two things were keys to keeping the business going because the brick industry is driven by the housing market. Nationally, 70 percent of the product goes into the housing market,” he explains. “Right now there is 50 percent unemployment rate in our manufacturing side of the business.” “Our industry is as bleak as any in this country,” he
Hebron Facts: states. “We are normally used to 1.6 million housing starts. We are now at 300,000 housing starts. The consequence of that is when 70 percent of your product goes into housing, you can imagine what that does.” Along with changing its business focus, Hebron aligned itself with a company in Canada that had shut its plant down; a move that Paseka feels is a silver lining for the company. Now that Hebron lined itself with the Canadian company, they were able to take 30 percent of the production to Canada. “If we were selling housing strictly I believe we would not be in business,” Paseka states. “We are probably one of a handful of brick companies that are profitable.” One consequence of the economy the last couple of years has been that companies like Hebron have had to tighten the belt. “I’m an optimist,” Paseka states. “We are someday going to get back to some normalcy. We are going to work our way through these times. When we do, this belt tightening will pay great benefits. We had to reduce costs. We have less people to do more things. Everyone understands that there is difficulty out there in the market.” Alan Van Ormer - avanormer@prairiebizmag.com PB
In 10 years, Hebron Brick Company has grown
➤ from 100 employees to 225
Revenue generated over those years started
➤ around $10 million and peaked at $30 million. The headquarters is the sales office located in
➤ Fargo, ND
main brick plant is in Hebron, ND. Hebron ➤ The Brick Company also manufactures block and concrete products in plants located in Grand Forks, ND and Mandan, ND.
➤ Hebron Brick Company has facilities in... North Dakota - Fargo, Grand Forks, Devils Lake, Minot, Bismarck/Mandan, Jamestown South Dakota - Rapid City, Sioux Falls Minnesota - Fergus Falls
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17
Economic Development
Primary sector
represents economy base It is important for economic development organizations (EDOs), as well as communities as a whole, to understand the importance of these primary-sector companies and find ways to contribute to their success. he primary sector represents the base of our economy. Primary-sector companies are those that export a majority of their goods and services outside the trade area and therefore bring new wealth into the community. This new wealth circulates and supports all other sectors of the local economy, thus making the primary sector the principal driver of economic and community growth. The growth and stability of these companies is critical to the region’s success. It is important for economic development organizations (EDOs), as well as communities as a whole, to understand the importance of these primary-sector companies and find ways to contribute to their success. Communities and EDOs act in many ways as a supply chain, helping provide the ingredients needed for a healthy and competitive operating environment allowing companies to thrive. Multiple community partners need to be engaged in order to create such an environment. As a regional economic development organization, one of our most important tasks is to understand the existing business base: who are the companies, what are their needs, and how can we connect them to the proper entities to help resolve issues and facilitate their success? We may work with the city to improve an issue related to infrastructure, with state legislators who can influence policy that enhances the business climate or finally, with companies to address workforce development issues. One critical question all communities and EDOs should ask themselves is: How are you using your local intelligence to further your economic development
T
18 Prairie Business
February 2011
strategy? As economic development organizations face an ever-changing, globally-competitive environment, the best resources for ensuring economic growth and stability may well be an ability to ask questions, listen and nurture PB your relationships.
KEVIN MCKINNON President, Greater Fargo Moorhead Economic Development Corporation kmckinnon@gfmedc.com
(continued on 20)
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prairiebizmag.com
19
FINANCIAL
COVER STORY
20 Prairie Business
Tight market slowly improving Lenders are seeing a tight economy that is slowly making progress. n North Dakota, Michael Gallagher, Deputy District Director for the Small Business Administration working out of the North Dakota District Office in Fargo, is seeing commercial lending trends following additional incentives through the American Recovery Act and the new Jobs Act. “My perception, to a certain extent, is that capital is hard to get for existing businesses,” he explains. “I’m also speculating that I am not so sure about people wanting to start a business because of the economy. The job market in western North Dakota is so good that people are not looking at starting a business.” South Dakota had a huge year in 2010. The SBA had the third highest volume in history with 362 loans and the largest ever dollar amounts exceeding $77 million (shattering the prior year’s then-record of $71 million). “We have had a phenomenal stretch over the past two years,” says John Brown, District Director, South Dakota District Office. Brown cites two reasons for the increase in loans and dollars. “Here in the Midwest, we were one of the last to really feel what the rest of the country has been going through,” he explains. “We started to feel it at the conclusion of the prior year (2008). Fundamentally, business owners decided to put everything on hold for 90 days or so and wait and see how everything settled out. But businesses regained some measure of confidence rather more quickly than in other areas of the country.” Second, SBA made significant programs changes that reduced fees and increased guaranty amounts. “That spurred lending activity for us and, combined with the fact that people were looking at it as being not as bad in South Dakota as it seemed elsewhere, helped increase our volume,” he says. Gallagher is also seeing more financial institutions turning toward the SBA to assist in loans because of the uncertainty in the market, tightening credit, and regulatory compliances. He is also seeing a significant number of loans in the professional services – particularly health. Another huge benefit for bank clients in Minnesota, North Dakota, and South Dakota, is the extension of tax credits for two more years. Lee Reierson, Bremer Bank Business Banking Manager for the Fargo Charter whose coverage area runs from Minot, ND to Perham, MN, says extending the tax credit is huge. “That just gives people confidence to
I
February 2011
continue to invest,” he explains. Reierson sees commercial lending picking up, adding that more people are looking at real estate projects and the farm economy continues to be strong, as well as contractors in the Fargo area heading west to pick up work. “You can feel the lift,” he says. “We’re looking for a good spring.” In South Dakota, Cathy Clark, Community Bank President for Wells Fargo, explains there was a sense of conservatism over the last year as businesses made adjustments throughout 2010. Now, they are feeling a little bit more optimistic, says Clark, who handles the Sioux Falls, SD, Marshall, MN, and Worthington, MN, markets. Manufacturing, agriculture, and the trucking industry all saw slight growth. “I think across the board (heading into 2011) we will see improvement in loan demands,” Clark states. “It is the right time of the year for us to be talking to our customers to help them with opportunities for growth. On the investment side, how do we help them maximize their return on deposit as well as looking at products and services to save them time, money and provide value for them.” Delton Steele, Vice President and Senior Lender for US Bank, located in Fargo, ND, says there is more activity heading into 2011 with commercial loans. “Starting in the September-October 2010 time frame, we have started seeing a better number of deals in our pipeline, and our bankers are having more conversations about potential opportunities,” Steele says. “In 2009, we definitely saw a slowdown. Most business owners had concerns about the national economy. However, we are now seeing more positive levels of activity going on.” Heading into 2011, Steele states he is cautiously optimistic. “There are signs that commercial lending is picking up,” he says. “There will be challenges, especially with the increased costs of FDIC insurance and still unwritten rules facing financial institutions. We will adapt as we always do. The future of providing the right financial solutions to our customers is bright.” Despite the successes, many feel that the Heartland of the country is still in a slowdown. “It didn’t hit us as hard overall, but it is still going to take us a while to work through it,” Brown says. “We still have good economic activity. We’re coming out of the recession but it is going to be slow and steady improvement.” Alan Van Ormer - avanormer@prairiebizmag.com PB
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21
FINANCIAL
COVER STORY
Businesses receive tax credit extensions he year 2010 was a busy one for tax legislation; as we approached the end of 2010, the President signed the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” on December 17, 2010. In addition to extending generous bonus depreciation (through 2011) and Sec. 179 depreciation provisions (through 2012), the act included several income tax credit extensions for businesses. The research tax credit was renewed through December 31, 2011. This credit is for qualified research activities and is calculated under either a formula that provides for a 20% credit for qualifying expenses over a fixed-base amount or a simplified formula that provides a 14% credit in excess of an average base amount. The Work Opportunity Tax Credit (WOTC) encourages employers to hire individuals from targeted groups. The WOTC is equal to 40% of up to $6,000 of the targeted employee‘s first year wages. North Dakota and Minnesota also offer their own tax credits to offset state income taxes. Some examples include: a North Dakota Workforce Recruitment Credit (for employing extraordinary recruitment efforts) and a Wage and Salary Credit (for corporation’s doing business in North Dakota for the first time). Both states also have their own version of the research tax credit for qualifying research activities. PB
T
SCOTT SWANHOLM Partner, Eide Bailly, LLC sswanholm@eidebailly.com
AG EXPORT
COVER STORY
Exporting is big business T hose who export agricultural products out of our region find that exporting is not as challenging as initially thought. “It is becoming easier to trade globally,” says Heather Andrea Ranck, International Trade Specialist for the United States Commercial Service, part of the United States of America Department of Commerce, with an office in Fargo, ND. “Emerging countries are developing a middle class and want American products. Markets are changing.” And after a recent economic downturn, experts like Rock Nelson, International Marketing Director of the Sioux Falls Development Foundation, Chamber of Commerce and Airport, believes the export business is starting to pick up, in part because of President Obama’s National Export Initiative. “Very few, if any have had to close their doors – it’s their exports that have kept them going,” Nelson explains. Nelson says that according to the U. S. Department of Commerce, “More than 70 percent of the world’s purchasing power and 95 percent of the world’s consumers are outside of the United States, so if a U. S. business is only selling domestically, they are reaching just a small share of their potential customers.” In the export business as a whole, Nelson also believes that exporters are becoming more knowledgeable, learning the rules and regulations, and drawing up the correct documents to compete in a global economy. South Dakota companies are exporting worldwide in ag machinery, equipment used for holding pens, grain bin
storage, and other machinery worldwide. In addition, corn, soybeans, wheat dried distillers’ grain, sorghum, sunflower seeds, and canola are all emerging export crops. “There is untapped potential,” Nelson explains “A lot more can be sold overseas. It is about getting out there and marketing our goods.” The state is heavy into the export business. For example, its exported manufactured goods were: 2007 - $1.5 billion, 2008 - $1.6 billion, and 2009 - $1 billion. Export numbers are expected to exceed the 2009 figures in 2010. These figures do not include South Dakota’s grains and live animal exports. The ethanol industry is one market that has seen an increase in exporting over the past five years. Clayton Vaughan, Director of Business Development for POET Nutrition, says exports now represent 25 percent of the ethanol industry’s production. Industry exports started in North America, moved to Southeast Asia, and are now going around the world. POET Nutrition markets all of the corn products for 27 POET biorefineries and exports Dakota GOLD distillers dried grains with soluble (DDGS). In 2005, the ethanol industry exported more than 1 million metric tons and projections for 2010 show more than 8 million metric tons being exported. “Feed producers around the world are recognizing DDGS as a valuable and important new feed ingredient with concentrated protein values,” Vaughan says. Despite heavy success, exports have seen some decline in certain areas because of the recession. (continued on page 24)
22 Prairie Business
February 2011
prairiebizmag.com
23
COVER STORY
AG EXPORT
(continued from page 22)
Ranck says the recession hit the export business especially in the housing sector, as well as exports in machinery to the former Soviet Union. Food products weathered the recession the best. One key point is that free trade agreements are opening markets for exports and imports alike, Ranck says. “You are already competing globally if you sell in the United States, because the U.S. market is free and open, with many global competitors,” Ranck states. Ranck believes that there are at least three pending Free
Trade Agreements that could impact local companies and food exporters. The most prominent one is the US-Korea Free Trade Agreement. The other two involve possible agreements with Colombia and Panama. The new Congress could vote on the agreements in early 2011. “Many companies in this region stand to gain substantially if the FTA passes, particularly ag (food companies),” Ranck PB explains.
North Dakota wheat ‘making hay’ resident Obama would like to see the United States double its exports in the next five years. North Dakota’s High quality wheat crop is well on its way to meeting that goal. “An average North Dakota crop is roughly 300 million bushels with about half used here in the domestic market, where the focus on whole grains as part of a healthy diet has boosted domestic use,” explains Neal Fisher, Administrator of the North Dakota Wheat Commission. Exports account for the other half and are routinely shipped to nearly 100 foreign customer countries. The top ten overseas customers are located in Asia, Europe and Latin America. Exports have expanded this year with stronger demand for higher quality products from growing global economies, coupled with difficulties in alternate supplier countries, shifting demand to the United States, the world’s most reliable supplier. “We are making hay on that reputation, given the Russian export ban and quality issues in Australia and Canada. Sales are up by 90 to 100 percent,” Fisher explains. The Wheat Commission engages agricultural economists at North Dakota State University to assess impacts of the wheat industry on the economy of the state. The latest indicates a positive economic impact of an annual North Dakota wheat crop at $7 billion, higher due to better yields and much better prices. Half of that value can be attributed to an aggressive export campaign. The Wheat Commission partners with NDSU’s Cereal Quality Lab, the Northern Crops Institute and US Wheat Associates to promote North Dakota’s high quality crop in the export market. Fisher says the goal is to demonstrate quality and performance features of our wheat to regular and prospective customers worldwide and to provide customer service on a regular and dependable basis. A focus on quality and superior performance has allowed spring wheat and durum to differentiate itself from other wheat in the world market. “We call it high performance wheat, Fisher says, and high performance, high protein wheat is the fastest growing segment of the global wheat market.” That is a testament to the high profile variety development program at NDSU, as well as the farming practices and marketing system in the state that have collectively kept the wheat industry moving forward, Fisher says. PB
P
NEAL FISHER Administrator North Dakota Wheat Commission nfisher@ndwheat.com
BIOTECH
COVER STORY
?
Biotech cluster = economic development eing that this region has a significant agricultural presence, some experts are seeing signs of a biotechnology cluster taking shape in pockets of Minnesota, North Dakota, and South Dakota. “It takes time to build an industry cluster,” states Mike Jerstad, Partner, PrairieGold Venture Partners, headquartered in Sioux Falls, SD. Jerstad is seeing a conglomeration of
B
24 Prairie Business
February 2011
biotechnology, agriculture, green technology, and life sciences; all pointing toward the development of a bio-agriculture cluster. In addition, Jerstad believes that jobs will come from cluster development. “Clusters feed off of themselves to drive job growth by organically creating opportunities as opposed to smokestack chasing,” he explains. “Bio-agriculture is a major core competency of ours, and it is an area in which we can
(continued on page 26)
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COVER STORY
BIOTECH
(continued from page 24)
dominate. The jobs created from this sector also have the potential to be higher-paying, benefiting both job-seekers and the government.” One proponent of biotech clusters is Rodney Larkin, Associate Director for Initiative for Renewable Energy in the Environment, an organization set up by the University of Minnesota to drive research in renewable energy. “Seldom does one company have all the right ideas and all the right technology to make something work,” he states. “The capabilities are more complimentary than competitive. That is the advantage of clusters.” Larkin explains it is important for strong collaboration between the academic and industrial community to build strong industry clusters. However, one challenge is that there is not a lot of investment in the Midwest. The primary investment is on the East Coast and West Coast. “We need to see how to bring that investment into the Midwest,” he explains. And that is a reason why Satish Chandran was hired as the Director for the Center for Biopharmaceutical Research and Development in Fargo, ND. The Center of Excellence has received $2 million from the state of North Dakota to develop biotechnology activities and to create biotech jobs. In addition, private investors have contributed $3.5 million and the State of North Dakota has matched that investment. The Center is a catalyst for creating biotech clusters and can help fill in gaps that companies may need including funding, strategies, bringing in technology to enable companies, and to make products. Currently, Chandran is building the program’s foundation. He states that clusters are one approach to developing a biotechnology program. “Anything that is going to happen needs mass action and a biotech cluster is one approach,” he explains. “Each piece has the expertise to build the cluster. Together each piece will be able to create the end product.”
According to Jerstad, several components need to be present in the development of a bio-agriculture cluster. They include a robust university system, a critical mass of human resources, sources of risk capital, an active private sector, engaged government entities that understand economic development, and the natural or geographic resources necessary to execute on a bio-ag business plan. South Dakota State University, located in Brookings, SD, is growing with the biotechnology field. The state’s largest university has created a Technology Transfer Office because of how the field is continuously evolving. The office manages discoveries, inventions, as well as intellectual properties. In addition, SDSU has more than 20 years of experience in livestock biotechnology, particularly veterinary science where researchers have discovered causes of livestock diseases and are now addressing those diseases with vaccines. In addition, there is the university’s strengths from developing crop varieties, including strong wheat, soybean and oats breeding programs. Kevin Kephart, Vice President for Research, says he definitely sees an industry cluster starting. “There are other things taking place in Eastern South Dakota,” he says. “(One is the) concept of an I-29 economic corridor. What’s different now is that economic directors in key communities are getting together, sharing their vision, and developing a strategic plan. Part of a resulting plan would include economic development.” Jerstad and Chandran both feel that this region has those components to develop an industry cluster around Fargo and Sioux Falls, as well as other sections in the Midwest. “People are starting to realize that ag and ag-biotech could be an interesting sector,” Jerstad explains. “All these forces are coming together to create the right environment to grow a cluster here.” The largest barrier is human resources. “Not that there aren’t smart people here, there are just fewer people here,” Jerstad says. PB “We’re starting to draw human resources here, however.”
Biotech and Life Science Investing in the Upper Midwest ife science investing in the Upper Midwest is undergoing a bit of a renaissance. A number of different entities are investing significant resources in the sector as new discoveries have shown real promise in improving animal and human health: Funding sources such as venture capital firms and venture debt shops have made significant investments in early and growth stage companies developing novel technologies in cancer, diabetes and cardiovascular diagnostics and treatments; The for-profit and non-profit private sector—including health systems, energy providers and startup companies in both fields—have poured millions into developing technologies that are synergistic with their core missions. Larger companies in these sectors have also been making strategic acquisitions to bolster their core competencies and diversify into new ones; University systems in the Upper Midwest are beginning to recognize the merits of technology transfer as a means to the end of obtaining greater research dollars and bolstering university balance sheets and prestige; and Federal, state and local governments have increasingly offered financial and other incentives to companies and their sources of capital to (re)locate in their respective geographies. PB
L
26 Prairie Business
February 2011
MIKE JERSTAD Partner, PrairieGold Venture Partners, Sioux Falls, SD jerstad@pgvp.com
Community Spotlight
Aberdeen
A new South Dakota Wheatgrowers Association facility in Aberdeen.
‘Low stress’ in Aberdeen From being named one of the “Top 100 Best Communities for Young People” to sitting near the top of the “Least Stressed Counties” in the country for a majority of the year, Aberdeen, SD has plenty to cheer about in 2010.
Currently, Aberdeen’s estimated population is
25,000 residents with more than
1,400 businesses
nd the community leaders are ready to take that momentum into a new year. “I think we will see a lot of our businesses in Aberdeen begin to grow again and to hire to the pre-2009 levels as the economy begins to pick up,” states Chris Haar, Director of Operations, Aberdeen Development Corporation. “We will continue to recruit additional companies and employ all economic development tools available.” Mayor Mike Levsen adds that Aberdeen is a concept that understands the interconnected reliance of all within the region and understands that the economic, cultural, recreational, business, and political futures and issues are indistinguishable from one part of the area and any other. Currently, Aberdeen’s estimated population is 25,000 residents with more than 1,400 businesses. There are unlimited hunting opportunities and other outdoor activities, art galleries, and quality of life that allows families to grow. “From my perspective, education is key to the success of any community because the focus is upon the positive development of our youth,” explains Julie Stevenson, Public Relations and Marketing Manager for Sanford Medical Center Aberdeen.
A
Northern State University and Presentation College. Presentation College is celebrating its 60th anniversary in the community. Currently, the school is fundraising for a $14 million, 90,000 square foot multi-purpose building because of the additional space needed for increased enrollment. The facility will also include a new library and integrated health center. In addition, Fall 2011 will be the inaugural season for the Presentation Saints’ football team. “Presentation College is able to quickly meet the needs of today’s employers for training programs, continuing education for employees or helping employees complete their college degrees,” states JoEllen Lindner, Vice President for Enrollment. Along with Presentation College, Northern State University is also seeing increased enrollment. Northern State University President Dr. James Smith said businesses consider moving to Aberdeen because of the potential for a highly-educated workforce. “They like the quality of life here and they like the small town feel,” he states. “If you couple this young workforce consideration with the general business climate that truly embraces entrepreneurship, I think the environment is very appealing.”
EDUCATION BOOMING
BUSINESS OPPORTUNITIES
Aberdeen has public and private schools, as well as 28 Prairie Business
Aberdeen has developed new ways to attract business (continued on page 30)
February 2011
10 Largest Employers in Aberdeen Avera St Lukes
1,500+
Aberdeen Public Schools
650 3M
605 SD Wheat Growers
579 City of Aberdeen
512 MidStates Printing/QQP
400
Wal-Mart
351 Molded Fiber Glass Companies
349 Northern State University
300
Hub City Inc.
RS
CE
E
NG 6 0 ATI Y R B
EA
L
291
Unlimited Opportunities Endless Possibilities
Celebrating 60 Years in 2011!!
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29
Community Spotlight
Aberdeen
(continued from page 28)
opportunities. For example, community leaders launched a promotional program ‘Aberdeen: Write Your Story’ and redeveloped Downtown Aberdeen to make it more public-friendly. “We’re trying to create downtown as a place that people want to come,” says Margot Gillette of the Aberdeen Downtown Association. “We want to recruit new businesses and enhance the facilities we have.”
“From my perspective, education is key to the success of any community because the focus is upon the positive development of our youth,” explains Julie Stevenson, Public Relations and Marketing Manager for Sanford Medical Center Aberdeen.
There have been several major construction projects that will bring in more jobs to the community. The Northern Meat Packers is expected to open a more than $100 million facility in 2012 adding at least 560 new jobs. Northwestern Energy has a $63 million expansion to serve the growing community. Molded Fiber Glass Companies is still expanding its wind blade
HAPPILY EVER AFTER BEGINS HERE.
30 Prairie Business
February 2011
manufacturing company. The company opened in 2008 with 350 employees and expects to reach more than 600 workers. Sanford Medical Center Aberdeen is expected to be completed in 2012 with an 113,000 square foot, 48bed hospital to join Avera St. Lukes (the city’s largest employer) to provide health care services. In addition, business opportunities in 2011 could include an ancillary cattle-related service and retail and wholesale product business, health care connected services, business, single family, and multiple family housing, as well as general retail to serve the growing trade area. “Aberdeen has made a concerted decision to grow,” says Julie Johnson, Executive Director, Absolutely Aberdeen! “This is a very positive signal to others who may want to move their businesses, their next expansion, next career choice to Aberdeen. The table is set for Aberdeen to grow, as all of the hard infrastructure investments that need to be in place are virtually done.” What it also means is that the community has to continue to address the workforce issue. “As these companies ramp back up, we will need to continue our efforts to ensure they are able to recruit and hire well qualified people,” Haar states. “Aberdeen is well positioned to meet this challenge as we have the desire and capability to do so.” Alan Van Ormer - avanormer@prairiebizmag.com PB
The possibilities are endless in Aberdeen. Low unemployment, strong workforce, business and educational opportunities, safe environment and friendly neighbors make it the perfect place to create the life you want. Write Your Story in Aberdeen.
Aberdeen Community Spotlight Sewage Treatment plant New fire stations Wylie Park Campground expansions New aquatic center Downtown Streetscape project Storybook Land Visitor Center Mike Levsen Mayor Aberdeen
Julie M. Johnson Executive Director Absolutely Aberdeen!
JoEllen Lindner, M.A. Presentation College Vice President for Enrollment
New airport terminal Regional Health and Fitness Center Swisher Field (joint use facility) 8th Avenue reconstruction Brown County Fairground updates Technology Center at Northern State University
Christopher A. Haar Director of Operations Aberdeen Development Corp.
James Smith President Northern State University
Margot Gillette Aberdeen Downtown Association
CRITICAL INFRASTRUCTURE BUILT IN LAST 10 YEARS
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Additional refinery needed? As North Dakota oil production hits new records every month, the talk of building additional refineries within the state to process that fuel also grows. recent study conducted by a consulting group indicates that a new refinery in North Dakota would cost upwards of $700 million to build to process 34,000 barrels of oil daily. The study was financed by a U.S Energy Department grant obtained by former Senator Byron Dorgan and administered by the North Dakota Association of Rural Electric Cooperatives (NRaREC). “This study shows that a new refinery will create good energy jobs while helping address frequent diesel shortages in North Dakota,” Dorgan said. “Allocations of diesel during harvest have always presented difficult challenges to farmers. A project like this would also have a national impact, by helping to lessen America’s dangerous dependence on foreign oil.” It sounds good, but experts say building a refinery comes down to simple economics. “On a large scale it is unlikely,” said Ron Ness, North Dakota Petroleum Council President. “Possibly there could be something in niche markets, or Tesoro could further their own expansion,” he said. Ness says it was a good issue to study and experts provided a thorough analysis. “It gave a clear understanding that the refinery industry is very complex,
A NORTH DAKOTA BENEFITS New refinery capacity would provide employment to: • An estimated 75 operations personnel with an average salary of $80,000 • An estimated 80 maintenance positions with an average salary of $75,000
and a difficult industry to enter – let alone build a grass roots refinery,” he said. NDaREC Executive Vice President Dennis Hill says the study showed the possibility of a new refinery is not at the level of profitability that would satisfy traditional oil refinery development. “It was good in that it helped the industry identify the markets that hadn’t been thought of,” Hills said. Those markets are diesel fuel and naphtha, a chemical used as a diluting agent for pipelining heavy crude. Traditionally, refineries in the United States are geared toward making gasoline, but that is changing. North Dakota’s only oil refinery, Tesoro Corporation facility in Mandan, already produces more gasoline than North Dakota consumes. Tesoro Manager John Berger says his plant is continuously looking at new ways to utilize North Dakota’s abundance of crude oil. “With the demand [for gasoline] down, and a lot of forecasting for even more fuel efficiency standards… and using other additional fuels, the U.S. is looking for ways to get more diesel out of every barrel of crude,” Berger said. He notes that the Tesoro refinery has doubled in size since its origin. In the spring of 2010, Berger said the plant was closed down for an entire month so they could look at (continued on page 34)
• An estimated 55 professional and administrative jobs with an average salary of $85,000 • The personal income from these jobs is estimated to be about $16.6 million per year. Source: North Dakota Refining Capacity Feasibility Study Tesoro Corp. facility in Mandan, ND produces more gasoline than North Dakota consumes. (Photo by Maxine Herr)
32 Prairie Business Energy
February 2011
Building A Strong America®
Our North Dakota roots are strong, and their reach is long. MDU Resources Group’s diversified businesses operate across most of the United States, helping build a strong American infrastructure. • We provide natural gas, oil and electricity that power business, industry and our daily lives. • We provide pipes and wires that connect our homes, factories, offices and stores to bring them to life. • We build the transportation network of roads, highways and airports that keeps our economy moving. We are proud to be a Fortune 500 company, and the largest publicly traded business headquartered in the four-state region of North Dakota, South Dakota, Montana and Wyoming.
1200 West Century Ave., Bismarck, ND | www.mdu.com
Montana-Dakota Utilities Co. • Great Plains Natural Gas Co. • Cascade Natural Gas Corporation • Intermountain Gas Company • WBI Holdings, Inc. • Fidelity Exploration & Production Company • Williston Basin Interstate Pipeline Company • Bitter Creek Pipelines, LLC • Total Corrosion Solutions, Inc. • Knife River Corporation • MDU Construction Services Group, Inc.
(continued from page 32)
new opportunities, and as a result, they developed a number of projects to increase capacity. “By being down for a month, we increased diesel production and our ability to run more crude oil,” Berger said. Because diesel has become more valuable over the past few years, Berger said that was a big part of the reason for
warrant the construction of a new oil refinery in North Dakota “We’re deficient at periods of time, but it doesn’t mean we need to build new refineries,” Ness said. “The economics don’t work to build something for six weeks of deficiency.” Berger believes the state is actually fairly well supplied
“This was a pump-priming study,” NDaREC Executive Vice President Dennis Hill says. “And we’d like to see someone turn it into an investment for North Dakota.” the spring shutdown. It allowed them to discover better ways of separating diesel and increasing that supply. Namely, developing a diesel hydro treating capability, a process to produce ultra-low-sulfur diesel – often termed a “green” fuel. Concern comes at harvest, when diesel fuel is harder to come by. But it may not be enough of a demand to
Calling Fargo home since 1969 Beginning with a regional favorite, Steiger tractors, the Case New Holland plant in Fargo has been meeting the global needs of agribusiness with wheeled and tracked machinery under the Case-IH, Steiger and New Holland brands. In addition, the company has manufactured the finest line of wheel loaders for international construction markets. Thanks to our dedicated workforce and the support of the Fargo-Moorhead community, we look forward to the next 40 years.
3401 1st Ave. N., Fargo, ND 58702 34 Prairie Business Energy
February 2011
www.cnh.com
by bringing in product from Montana, Canada and surrounding areas. He says that if another facility is built, it will need an outlet because storage becomes an important factor, too. Hill agrees that the diesel supply is sufficient for most of the year because of the imports, but he says as the market grows, those acute shortages could become extended. Hill foresees a greater demand for the fuel in the state as diesel-run generators in oil rigs and trucks hauling crude increase. Not to mention the strong use of diesel within the agricultural industry. “The general economic upturn translates to more trucks hauling goods from Minneapolis to Seattle, that takes a lot of product as well,” Hill said. But a need for more diesel may not indicate a need for a new refinery. Berger says the nation’s refineries are currently underutilized. “Three years ago everyone thought we needed more refineries, and now they’re shutting them down. We’re not short refining capacity,” he said. Building a new refinery would require investors, and Hill says with a lot of big, unanswered questions like what will regulations look like in the future, the investment would require some incentives. This is not any kind of slam dunk; it’s not an easy process,” Hill said. Petroleum Geologist Horace Pipe can attest to that. He’s led the efforts to build a15,000-barrels-per-day oil refinery on the Fort Berthold Indian Reservation in Ward County, ND. It’s a process that’s been in the works for nearly a decade, partly because the tribes have changed from initially targeting feedstock from the Alberta tar sands to utilizing crude much closer to home in the Williston Basin. Currently, the proposed refinery plan is in the hands of the Environmental Protection Agency. “The Federal EPA does not have a minor source permitting program, so since there are no regulations on Indian land, they can’t give us permits,” Pipe said. Pipe says they submitted the Final Environmental Impact Statement in August 2009, and though federal law requires a decision within 30 days, the tribes continue to
wait due to the permitting issue. Though Ness feels the market isn’t currently showing a need for another refinery, he admits that could change. “The industry will react if the economics are there,” he said. But at this point he feels it makes more sense to move the barrels to other markets. “It doesn’t mean it won’t ever happen, though,” Ness said. Hill says a potential investor would certainly need to conduct additional study. “There needs to be more analysis before anyone would put steel in the ground and money on the table,” he said. “It takes a couple billion dollars if you’re truly going to build one,” Berger said. He adds that the challenge is waiting for the payout. “It is a heavy investment and you won’t get your money back for a long, long time. And regulators will try to drive you out of business from day one,” he said. If it did happen, the study predicts some significant benefits to the state. In addition to increased diesel fuel production, a new refinery would provide over 200 high-salaried jobs and increase state revenues. For now, the U.S. Department of Energy has accepted the final report of the refinery study, so it is available for anyone to review. Hill hopes potential investors take time to look at it. “This was a pump-priming study,” Hill said. “And we’d like to see someone turn it into an investment for North Dakota.” Maxine Herr is a Bismarck, ND-based freelance writer. She can be reached at maxine606@msn.com.
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Ethanol: Let the market dictate Many of those in the ethanol industry are asking just one thing: let the market dictate what consumers purchase. n fact, Ron Lamberty, Vice President, Market Development for the American Coalition for Ethanol, explains by using a football analogy. Lamberty directs ACE’s market development efforts, working with petroleum marketers to facilitate the use of ethanol nationwide. “If the fuel marketplace were a football game on a 100yard field,” he explains. “the rules would state that if ethanol gets past the 10-yard line, we will be penalized. As
I
long as E10 is the highest blend people are allowed to use, that is the only part of the field we can compete on.” “People are willing to trash ethanol with incorrect information,” says Lamberty, adding that it is the ethanol industry’s job to do a better job of correcting that incorrect information. He offers the “food vs.” fuel argument as an example. “Ethanol’s opponents tell people that there is less corn for food because we are using corn to make ethanol. That is not true – in fact, the opposite is true.” (See chart on 37) Rob Skjonsberg, Senior Vice President of Public Policy and Corporate Affairs for POET, candidly states that there is not a level playing field today and with the help of Growth Energy, the nation’s largest trade association involved with ethanol, POET is hoping to change that. Growth Energy is working to implement a Fueling Freedom Plan in 2011. This plan would phase out government support of ethanol by reforming the current tax structure by gradually transitioning the tax credit to use for infrastructure, ethanol blender pumps, flex fuel vehicles, and dedicated pipelines. “Our belief is that from a competitive standpoint, ethanol is most competitive if we have that level playing field,” Skjonsberg explains. “Pointedly, we’re replacing current government controls with market access.” Skjonsberg uses this example. “If we can get to a point where there are 200,000 blender pumps, pipelines from the Midwest to the coasts, and every other vehicle is fuel flexed, ethanol has empowered consumers to choose the fuel that they want to use.” “Consumers can drive this industry and that is what Fueling Freedom is all about,” he says. Cole Gustafson, a Biofuels Economist at North Dakota State University, states it (continued on page 38)
36 Prairie Business Energy
February 2011
Ethanol Not Reducing Corn for Other Uses 14.00
US Corn (billion bushels)
12.00
10.00
8.00
6.00
4.00
2.00
0.00 2000
2001
2002
2003
2004
Ethanol
2005
2006
2007
2008
2009
2010
Other Use
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(continued from page 36)
is an intriguing idea to let the market dictate what types of fuels consumers can purchase, but at the moment the nation is quite a ways away from making that happen. However, he states that the ethanol industry is doing things like increasing blender pumps and encouraging the auto industry to build more flex vehicles, lowering water usage in the ethanol plant, and lowering emissions at
those who believe that the market should decide what type of fuel is purchase. “Car makers need to make vehicles that run on E85 so people can decide. That way it is an actual free market,” Lamberty states. “Then these questions about subsidies and the other programs can gradually go away. The market is actually determining fuel choice only when customers
“Agriculture is the prairie’s business,” Lamberty states. “The impact of ethanol on the Midwest has been pretty dramatic.” facilities across the nation that would allow the ethanol industry to be competitive on its own. Another factor is the uncertainty of federal policy support. “Ethanol will be competitive without the federal support,” he says. ACE, like many other ethanol supporters, is behind
38 Prairie Business Energy
February 2011
can choose any blend of gas and ethanol they want. Until we can actually compete on a fair level, we have to have policies that help ethanol compete. If it were legal to use more ethanol, people would. Right now, the U.S. is using as much as it legally can.” Rodney Larkin, Associate Director for Initiative for Renewable Energy in the Environment at the University of Minnesota, feelings are when there is a fledgling industry, in order to be able compete on a level playing field, there needs to be incentives to get infrastructure paid for. “Somehow you need to be able to make the playing field level for ethanol,” he says. “We have to figure out how to turn ethanol plants into biorefinery – not just producing ethanol, but other products.” There are at least three things that need to happen in order for the market to dictate what consumers purchase for gasoline, Lamberty says. The first is that once the Environmental Protection Agency makes a final decision on E15, consumers need to know that it has been tested, that there are no concerns, and it will not cause problems in a consumer’s vehicle. “They have to make an affirmative statement to say that E15 is a good, quality product,” he says. A second solution involves the ethanol industry itself. “The ethanol industry has to convince motorists that ethanol is a good fuel and the best way is to have people try the fuel,” he explains. “Anyplace they have tried E10 they keep using it, and we would expect the same with E15. We have to be able to instill confidence. We have to quit playing defense. And going on offense doesn’t mean attacking other fuels, it means promoting our fuel.” Finally, there is the continuing need for legislative support. “Not necessarily monetary support, but having policies put in there to essentially defend people’s rights to buy our products,” Lamberty says. “We need to have people understand that is a good quality product, made in America, creates jobs.” To sum it up, Lamberty believes that business needs to know what a powerful economic force ethanol is. “Agriculture is the prairie’s business,” Lamberty states. “The impact of ethanol on the Midwest has been pretty dramatic.”
ENERGY IN THE NEWS
NORTH DAKOTA WHEAT
EERC PARTNERSHIP DEMONSTRATES ABILITY TO REDUCE GREENHOUSE GAS EMISSIONS The Energy & Environmental Research Center (EERC) announced that its Plains CO2 Reduction (PCOR) Partnership has been awarded $768,000 from the U.S. Department of Energy (DOE) to continue research demonstrating the effectiveness of injecting a mixture of carbon dioxide (CO2) and hydrogen sulfide (H2S), a toxic and corrosive gas sometimes referred to as “acid gas,” into an oil field for the purpose of simultaneously reducing greenhouse gas emissions and improving oil recovery. Since 2006, the EERC’s PCOR Partnership, one of seven members of DOE’s Regional Carbon Sequestration Partnership Program, has performed a series of major field tests at sites in the United States and Canada to examine the effectiveness of carbon capture and storage (CCS) technologies, including the injection of acid gas at the Zama oil field in Alberta, Canada. Both the previous and planned work is being conducted in close collaboration with Apache Canada, Ltd., the owner and operator of the oil field, and Natural Resources Canada. The new funding will support two more years of activities at Zama that are aimed at demonstrating that acid gas injection is a safe and effective means of reducing CO2 emission while enhancing oil recovery. The findings will help support national and global efforts to develop and deploy CCS use as one option for mitigating the emission of greenhouse gases to the atmosphere.
OUR STATE’S TOP CROP Number 1 in planted acres Represents more than 1/3 of annual cash receipts from crops 40 percent of the state’s agricultural export value
LOAN FOR LODGING NEAR OIL PATCH APPROVED The USDA Rural Development has approved a conditional commitment for a guaranteed loan of $4,710,500 for lodging opportunities in Williston, ND. The funds will be used by Williston Express Hospitality, LLC to finance the construction of the Holiday Inn Express & Suites in Williston. Reports indicate that North Dakota's oil-producing counties have 23,000 more people today than they did a decade ago and more oil workers and their families are headed to the area. The North Dakota Department of Mineral Resources said production in the area of the Bakken Formation could double to nearly 700,000 barrels of oil per day in the next four to seven years. Industry officials are also projecting that the total recoverable oil in the Bakken and Three Forks formations may be more than twice the current estimates of 4 billion barrels.
WORLD’S FINEST WHEAT Exported to more than 100 countries world-wide
A “cadillac” wheat which brings premium prices in the world market
YIELDS NEARLY $7 BILLION IN STATE ECONOMIC ACTIVITY
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Money
Bonus depreciation is back with a bang Bonus depreciation allows taxpayers to temporarily increase the amount of depreciation they may claim in the year of acquiring the qualified NEW (not used) property, thereby accelerating deductions and potentially reducing taxable income. n recent history we have had bonus depreciation of 50%, and now there is 100% bonus depreciation (effectively letting the taxpayer immediately expense the entire cost of the qualified asset). There are very few limitations on bonus depreciation, and the taxpayer can even elect to not take bonus depreciation. However, any such election has to apply to ALL assets within that property class life. During 2010 bonus depreciation was retroactively reinstated for the entire 2010 year. Since bonus depreciation is effective on a calendar year basis, the retroactive application has caused serious challenges for fiscal year corporations that completed their tax planning, or filed their tax returns, without the additional bonus depreciation. The additional bonus depreciation may result in a much lower income (maybe lower than desired) if bonus depreciation is taken on the entire property class or a much higher taxable income if the taxpayer elects out
I
SCOTT HASBROUCK CPA, Shareholder Brady Martz & Associates, P.C. scott.hasbrouck@ bradymartz.com
of bonus depreciation for that entire property class. Further, if the fiscal year taxpayers have already filed their taxes, taxpayers will need to amend the tax filings to address the additional bonus depreciation. For qualified property acquired, AND placed in service after September 9, 2010 through 2011 there is now 100% bonus depreciation. The same bonus rules apply, just the percentage has changed. Bonus depreciation will generally revert to 50% for 2012. If bonus depreciation is taken in 2010, there will potentially be assets subject to 50% bonus while others will be subject to 100% bonus. You cannot elect between the two percentages. If the election is made to not take bonus, that election is effective as to ALL assets in that property class, regardless of the 50% or 100% bonus levels. Caveat: A number of states have chosen to not follow the federal rules and as such there may be state specific PB issues and adjustments to taxable income.
Entrepreneurship
The New Buzz in Rural Economic Development Over the past several years the demand and interest in being an entrepreneur and business ownership in the United States and especially our region has been exploding. Everyone has what I term the “entrepreneurial buzz.” he small business owner and the wanna-be-business owner (aka entrepreneur) want to use their skills and education to jump start a business idea and are in control of their own future. Minnesota has 464,946 small businesses, according to the most current federal data available. These small business statistics for Minnesota do not include all selfemployed individuals working in Minnesota. Additionally not only are new entrepreneurs popping up all over our region and state, but the interest in small rural towns getting into the “business” on entrepreneurship is growing. Business incubators, building improvement incentives, micro-loans and a more-user friendly attitude towards small business owners appear to be pervasive. As this trend continues, small
T BETH PRIDDAY Director, Business and Entrepreneurial Services, M State, Detroit Lakes beth.pridday@minnesota.edu
40 Prairie Business
February 2011
business support services such as SCORE, SBDC, SBA, Rural Enterprise Centers and Business & Entrepreneurial Support organizations will become more in demand. Michael E. Gerber, in the “The E-Myth Revisited” talks about business owners finding their “primary aim” and its importance to the success of an entrepreneurs business. He contends “with no clear picture of how you wish your life to be, how on earth can you begin to live it.” With that in mind, the communities and cities that want to get into the “entrepreneurial game” will also want to step up and increase their support of entrepreneurial pursuits and economic development at a grassroots level and figure out what their “primary aim” is for their community and long-range economic development plan. This may well be the very thing needed to keep this “buzz” alive! PB
Sales/Marketing
Social media tips for all stages When it comes to social media, you may be a dabbler with dreams, a maven with a massive following or maybe you’re still acclimating yourself to email. egardless of your knowledge, it never hurts to have some best practices in your back pocket. Because, if you don’t use it now, you’ll be using it soon. So keep these general tips in mind:
R 1
Brand yourself. Be consistent and true to your brand’s image and voice across all media platforms.
2
Humanity and personality. Put the “social” in social media by letting your followers see the person behind the post.
3
Be honest. The web is rife with rumors, innuendo and flat-out lies. If you don’t know, don’t Tweet, repeat or ReTweet. If you make a mistake, admit it and move on.
4
Open a conversation. You’re talking with people, not at them. Ask them for feedback, encourage them to talk to you and to each other.
5
Ask yourself what this subject, this product, this news or this idea means to your audience. Don’t just tell them why you care. Tell them why they should care.
6
Timing is everything. People want the most relevant information and they want it now. Be the first to get that information out and you’ll be seen as an industry leader.
7
Show and tell. Take advantage of multimedia to use pictures and videos when appropriate.
8
Always lead them back to your Web site. Use social media to start the conversation, and lead people to more in-depth information .
Social media is a noisy environment. Effective use means cutting through the clutter and delivering interesting, relevant information that your audience needs and wants. If you’re just getting started, check out these major social media sites: Facebook, Twitter and LinkedIn, and see what’s going on. And by all means feel free to contact us at any of the social media hotspots. Because, after all, this is a conversation.
MICHAEL PIERCE Digital Media Strategist Odney mpierce@odney.com
PB prairiebizmag.com
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ViewPoint
Can your business cater to the expectations of the booming oil industry? According to the U.S. Geological Survey, there are about 400 billion barrels of oil in the Bakken formation, a massive part of which lies two miles under the great state of North Dakota. With current technology, about 4.5 billion barrels can be extracted. And, in time, technology may advance to enable removal of the remaining 395 billion barrels.
s such, oil production is going to be in North Dakota a very long time. It’s an industry that involves large amounts of revenue and innovators who seize opportunities that cater to their needs stand to do very well. Here are some components to examine in your business model to cater to the oil industry: Flexibility: Each business you work with may have a particular service they need or a particular way in which it is provided. Customize the services you provide to match each company’s specific requirements or needs. Being available when and where your service is needed: The oil industry is a 24/7 business—in all types of environments and weather conditions. This may mean making your services available to them to accommodate that schedule and environment.
A
STEPHANIE MURDOCK Medcenter One Clinic Administrator
Making their job easier: Finding ways to make your customers’ job easier is an excellent way not only to attract customers, but to retain them as well. One way to do this might be to offer all your services in one location. Say, “Yes”: Don’t let the word “No” enter your vocabulary. Say, “Yes,” then make it happen. Train: Provide the necessary training for your employees. For example, we train our associates for the specialized health and safety regulations of the oil industry. Cross-train: Cross-train your employees to be able to perform as many different duties as possible. With the resurgence of the oil industry, it’s exciting to see local businesses growing and branching out in the PB services they provide.
Reliable water critical Access to quality, reliable water is critically important to the tri-state region from a quality of life and economic development standpoint. Water truly is the backbone of economic development. alking about water may not be flashy, but it is the first factor considered when recruiting new businesses and industries or expanding existing ones. The JBS Swift Pork Processing plant in Worthington, MN is one of the largest pork processors in the nation. For several years Swift, which employs over 2,000 workers, has wanted to expand production. However, their plans are always hindered because the City is not able to provide the additional water. The first question Worthington’s economic development director asks when a prospective business calls is whether they need water to process their product. If yes, the director sadly tells them to look elsewhere. Both Worthington and the Lincoln-Pipestone Rural Water System have turned away prospective ethanol plants because they do not have enough water. Rock County Rural Water District has turned down requests to open dairy operations because they do not have enough water. The lost economic value to the farmers and regional economy is immeasurable. A prime example of the positive economic impact water can have in rural areas has happened in the small
T
TROY LARSON Executive Director, Lewis & Clark Regional Water System tlarson@lcrws.org
42 Prairie Business
February 2011
town of Hull, Iowa. In 2008 the Green Meadows cheese factory opened and currently employs 90 people. It uses 300,000 gallons of milk a day, which is purchased from area dairies, and plans to double production in 2011. Without the water the Lewis & Clark Regional Water System is providing to Hull in the short-term by buying it from Sioux Center and running it through our pipes, as well as the promise of a permanent water source from Lewis & Clark when the System is operational, Green Meadows could not have opened in Hull. For the area’s economy, the cheese factory has been like a direct injection of adrenaline into the system. When it comes to infrastructure, it cannot get more basic than water. As water becomes scarcer a new motto has emerged – “water is the new oil.” Although it is often taken for granted, water truly is the oil that runs the engine of economic development. To help ensure the sustainability of rural America and remain competitive in the industrial market, access to quality, reliable water is job number one. PB Rural water is playing a critical role in that mission.
Technology
Harnessing the power of a connected world While the rest of the nation continues to climb out of the Great Recession, North Dakota continues to see a healthy economy and budget surplus.
tâ&#x20AC;&#x2122;s no secret that the energy boom in the Bakken formation has a lot to do with this. Anyone who has been out to western North Dakota recently has seen the whirlwind of drilling, road building and logistics activities that has companies struggling to keep up. With this growth comes challenge. As the roads and infrastructure are pushed to the breaking point companies are challenged by getting the right equipment to the right place at the right time. This is especially true for the oil field service companies that run trucks and equipment in the oil patch. In order to keep up service companies are increasingly turning to mobile technology to increase productivity and efficiency. The good news is that the range of mobile technologies available to solve these problems has grown considerably in recent years. Vehicle tracking technology is being provided as an integrated feature in heavy equipment, satellite
I IAN McPHERSON Vice President Sales and Marketing ian.mcpherson@pedigreete chnologies.com
tracking tags that run on batteries can be quickly applied to portable skids or trailers and smart phones deliver maps and messages to keep mobile workers on track and on time. As individual solutions these mobile technologies can significantly improve the way service companies operate. The most efficient companies have found a way to use these technologies in a common framework and web-based application. Pedigree Technologies has helped these service companies maximize the efficiency of their operations with applications to track, locate and monitor their mobile operations. The benefits of this new connected world arenâ&#x20AC;&#x2122;t limited to the Bakken. Just about anyone who has mobile equipment, assets or vehicles should be looking at how they can use mobile technology, because efficiency is a PB winning strategy in any economic environment.
WE MEAN BUSINESS, Let us show you how your ad dollars can work for you...
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Brad Boyd
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John Fetsch
Account Manager Sioux Falls southern SD/southern MN 605.271-4446 p jhanson@prairiebizmag.com
Account Manager Fargo/Moorhead eastern ND/western MN 701.232.8893 p 701.280.9092 f jfetsch@prairiebizmag.com
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By the numbers EMPLOYMENT (NOT SEASONALLY ADJUSTED) UNEMPLOYMENT RATE North Dakota Fargo MSA Bismarck MSA Grand Forks MSA Minot MiSA Dickinson MiSA Williston MiSA Jamestown MiSA Wahpeton MiSA South Dakota Sioux Falls MSA Rapid City MSA Aberdeen MiSA Brookings MiSA Watertown MiSA Spearfish MiSA Mitchell MiSA Pierre MiSA Yankton MiSA Huron MiSA Vermillion MiSA Minnesota Minneapolis-St. Paul MSA Duluth-Superior MSA St. Cloud MSA Rochester MSA Mankato MSA Brainerd MiSA Fairbault-Northfield MiSA Winona MiSA Fergus Falls MiSA Red Wing MiSA Willmar MiSA Austin MiSA Bemidji MiSA Alexandria MiSA Hutchinson MiSA Owatonna MiSA Albert Lea MiSA Marshall MiSA New Ulm MiSA Worthington MiSA Fairmont MiSA
2010 3.3% 3.5 3.3 3.7 2.9 2.3 1.8 3.1 3.8 4.4% 4.4 4.6 3.3 3.5 3.9 4.0 3.6 3.0 4.3 3.6 3.7 6.6% 6.5 7.3 6.3 5.2 5.3 10.0 7.0 6.2 6.6 6.4 5.5 5.5 7.4 5.9 8.5 6.7 7.6 4.9 5.7 4.5 6.5
2009 3.7% 3.7 3.4 3.8 3.2 3.0 2.3 3.1 4.5 4.4% 4.5 4.7 3.1 3.6 4.8 4.2 3.8 2.8 4.7 3.4 3.7 7.0% 7.0 7.9 6.7 5.7 5.9 9.4 7.8 6.7 7.1 6.8 5.9 5.4 7.5 5.8 8.7 7.4 8.0 5.0 6.0 4.3 7.1
EMPLOYMENT 2010 351,364 114,830 59,441 53,745 33,253 14,292 13,591 12,363 11,607 422,930 122,160 63,845 22,605 18,605 18,045 13,005 12,540 12,040 11,145 9,305 7,475 2,757,721 1,739,399 135,838 102,532 101,094 54,889 40,645 30,895 25,333 27,720 23,764 22,070 19,473 21,266 19,144 17,001 19,045 14,724 13,938 13,616 11,116 10,418
2009 345,642 115,090 58,838 53,035 32,187 13,957 14,017 11,566 11,363 425,265 123,855 63,255 22,725 18,780 18,075 13,020 12,710 11,955 11,330 9,510 7,655 2,760,482 1,730,397 135,185 102,382 100,391 54,868 43,149 30,911 27,327 27,491 23,935 22,362 20,471 20,280 19,170 18,120 19,920 15,363 14,086 13,901 11,393 10,538
MSA — Metropolitan Statistical Area MiSA — Micropolitan Statistical Area Sources: U.S. Bureau of Labor Statistics, Minnesota Department of Employment and Economic Development, Job Service North Dakota, South Dakota Department of Labor
12/23/10
$1.048 or $0.9546
$1.010 or $0.9906
U.S. to Euro
$0.7344 or $1.3617 $0.6973 or $1.4340
$0.7633 or $1.3101
U.S. to Chinese Yuan
$6.6323 or $0.1508 $6.8292 or $0.1464
$6.6548 or $0.1505
U.S. to Japanese Yen
$83.668 or $0.0120
$91.49 or $0.1464
$82.95 or $0.01206
$12.296 or $0.081 $12.88 or $0.07763
$12.34 or $0.08106
U.S. to Mexican Peso Source: Bank of Canada
46 Prairie Business
$1.017 or $0.9829
Data provided by Kingsbury Applied Economics
February 2011
Production Oil-BBL/day
$68.52 $66.78 $66.21 $63.14 $60.10
341,400 328,900 321,042 314,477 296,422
Drilling Permits 167 138 145 128 102
Sept 2010 August 2010 July 2010 June 2010 May 2010
Producing Wells 5.197 5,115 5,054 4,977 4,893
Rig Count 143 140 135 125 114
Source: NDOMB
AIRLINE BOARDINGS NOV. 2010
Minneapolis-St. Paul Fargo Sioux Falls Rapid City Bismarck Grand Forks Minot Pierre
% CHANGE/2009/2010
1,192,82 26,983 32,492 19,702 14,939 9,403 9,780 1,822
8.44% 0.60 15.80 0.20 0.42 14.48 97.54 23.61
CANADIAN BORDER CROSSINGS
MINNESOTA
12/23/09
U.S. to Canadian Dollar
Sept 2010 August 2010 July 2010 June 2010 May 2010
Sweet Crude Price/BBL
AUTOMOBILES
CANADIAN EXCHANGE RATE 11/18/10
NORTH DAKOTA OIL ACTIVITY
Intl Falls-Rainer Grand Portage Baudette Warroad
TRUCKS
2010
% CHANGE /2009
35,301 19,071 14,580 7,831
15.58% 14.50 12.94 15.35
1,792 1,497 573 857
-7.82% 53.07 -30.04 -19.98
28,560 7,879 3,997 4,413 3,161 2,586
15.81 18.62 - 0.22 17.37 27.64 7.21
17,014 6,228 871 2,015 1,590 513
6.57 - 7.20 - 8.32 7.35 21.19 -24.34
2010
% CHANGE /2009
NORTH DAKOTA
Pembina Portal Neche Dunseith Walhalla Noonan
Source: US Customs and Border Protection
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