Readjusting
Major employers adjust to ﾔnew normalﾕ Also in this Issue: • Earl Johnson Furniture • Paape Companies • Mattie Eggimann, City Center Hotel
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November 2012 • Volume 5, Issue 3
■
■
18
Special Focus: Managing health care costs
■
Earl Johnson Furniture
In 1974, Earl Johnson relocated his furniture store to the corner of Second and Cherry. Despite suggestions to move to the hill, he and now son Todd have stayed loyal to downtown Mankato and to their customers.
Big employers, big impact
Many of the major private- and public-sector employers in the region say they are slowly adding new staff after declines during the recession, while some companies are adding employment numbers at a relatively fast pace.
The single biggest expense for employers after payroll is health insurance. Employers are continuously looking for ways to lower their costs and still provide coverage.
36
22
■
42
Paape Companies
In 1948, Elden Paape opened a one-man shop to repair and service boiler systems. Today, Doug and Karen Paape operate Paape Cos. in Mankato, a corporation with a workforce of 50 and a branch office in Rochester.
MN Valley Business • november 2012 • 3
Features
F E A T U R E S
D E P A R T M E N T S ■
■
From the Editor................................. 6 Joe Spear: Employers up to the task
■
Business informer............................. 8
■
Job trends.......................................10
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Regional, state unemployment information
Departments
■
■
Retail trends....................................12 Auto sales, retail sales and hotel business
■
Greater Mankato Growth CVB .......33 Kiwanis Holiday Lights will impress
Regional Outlook.............................34 Jack M. Geller: Small towns, big retail sales
■
Area commodity prices ■
■
Agriculture Outlook.........................14 Agribusiness trends........................15
Greater Mankato Growth Member Activities . ........................30 Groundbreakings, new businesses, relocations and expansions
■
Kent Thiesse: Lessons from the drought ■
Construction, real estate trends.....11 Building permits, housing starts, home prices, interest rates
Tim Penny: Giving start-ups a boost
Greater Mankato Growth................28 Talent supply & demand: next steps
Vehicle, retail, construction trends in the area ■
Business Commentary....................20
Profile..............................................40 Mattie Eggimann
Business memos/ Company news................................44 Meyers named CEO of OFC, Sapude joins Eide Bailly, ■
Business updates............................16
SuperValu has interested buyers, General Growth says no to selling itself, Target sells its credit card portfolio, .. and more
HickoryTech increases dividend, and more.
On the Cover: The recession hit Le Sueur Inc. hard, but the parts manufacturer is rebounding. Photo by Pat Christman
4 • november 2012 • MN Valley Business
RIVERSIDE REGIONAL PET SHELTER, MANKATO, MN
IT’S IN THE DETAILS
SUSTAINABILITY
INTERIORS |
PLANNING
507.388.9811 |
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PAULSEN ARCHITECTS
The Riverside Regional Pet Shelter recently became LEED® Silver certified. Congratulations to the Blue Earth Nicollet County Humane Society for embracing sustainable design.
Paulsen Architects’ experienced, LEED® accredited team balanced the unique needs of the four-legged tenants in the Riverside Pet Regional Pet Shelter with environmentally sound practices and materials to design and build a facility that is not only good for our environment but works for today and tomorrow.
ARCHITECTURE | ENGINEERING |
November 2012 • VOLUME 5, ISSUE 3 PUBLISHER James P. Santori EXECUTIVE Joe Spear EDITOR ASSOCIATE Tim Krohn EDITOR CONTRIBUTING Jack M. Geller WRITERS Tim Krohn Pete Steiner Tim Penny Kent Thiesse Marie Wood
PHOTOGRAPHERS Pat Christman John Cross COVER PHOTO John Cross GRAPHIC Jenny Malmanger DESIGNER PAGE DESIGNER Christina Sankey ADVERTISING David Habrat MANAGER ADVERTISING Karla Marshall sales ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey
From the Editor
CIRCULATION Denise Zernechel DIRECTOR
For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6336, or e-mail kmarshall@mankatofreepress.com. MN Valley Business is published 12 times a year at 418 South 2nd Street Mankato, MN 56001.
Major employers find growth, face challenges
O
ur annual report on some of the Mankato region’s largest employers shows that the economy is not always an easy thing to predict. But it also shows that more often than not, employers are doing whatever it takes to change with economic circumstances and trying to weather the storm in ways that maintain their business in the community and consider the impact these changes may have on their employees. It’s important to note that overall, the Mankato region with a good diversity of industries has weathered the economic recession of the last few years fairly well. While the unemployment rate in the Mankato/North Mankato MSA peaked at about 7.1 percent in March 2010, it is now about 5 percent and has been as low as 4.4 percent. Sounds almost as good as North Dakota! But the unemployment rate often doesn’t tell the whole picture. While most businesspeople I know of are concerned about the unemployment rate, they may be more concerned about the total number of people who have jobs. If that number is rising, that’s good news. It means your pool of customers is expanding. If you look back about two years, you see we have about 3 percent more people who have jobs now. Mankato’s economic stability has always been based on the diversity of its major employers. Our report this month shows that of the top 10 employers in the area, only two — Carlson Craft Social and Carlson Craft Commercial — are purely private businesses. Two other top employers, the Mankato Clinic and Mayo Clinic Health System, are health care providers who are likely to see the demand for their services grow as the baby boom generation ages. Still, the clinics and large nursing and assisted living provider Thro Co. offer a balance to the major private employers mostly engaged in manufacturing. Says Chris Thro: “In health care, we’re selling a service people need. When they need it they need it...” Of course a government program serving health care needs of citizens is not always a good thing as government payments that make up significant revenue for those providers do not keep
6 • november 2012 • MN Valley Business
By Joe Spear up with the cost of inflation. And we know, there are various parts of our government-sponsored health care systems that are in need of financial repair. Our report also shows that the next 10 largest employers are dominated by the private sector. Le Sueur Inc., Verizon Wireless, Kato Engineering, Precision Press, Taylor Corp. Administrative, MICO and Hickory Tech are among those who employ between 300 and 640 people each. Le Sueur Inc., a longtime aluminum foundry, is involved in heavy industry. When the business of its customers, including Caterpillar, slows worldwide, the company feels the impact. Verizon Wireless, with it’s call and service center in Mankato, provides a high tech service. The company employs 540 in Mankato and continues to hire. And just like Le Sueur Inc., Verizon must keep up with changes in world markets that affect its customers, Verizon trains employees on new devices and accessories on almost a weekly basis. Both the major employers make attempts to keep workforces strong, knowing perhaps that people with jobs help communities stay vibrant. The world is more uncertain. Markets are shifting. Old ways of doing things are being disrupted by new technology everywhere. But, so far, Mankato regional employers seem to be up to the task. MV Joe Spear is executive editor of Minnesota Valley Business. Contact him at 344-6382 or jspear@mankatofreepress.com
■
Business Informer
Employment Unemployment claims mostly down First time claims for unemployment fell in most categories in September compared to a year earlier. In the nine-county Mankato region, claims in the construction sector fell by 41 percent, were down 22 percent in the retail sector and were down 33 percent in the service sector. Claims in the manufacturing sector, however, rose locally by 38 percent compared to last year. Statewide, first-time claims in manufacturing fell 21 percent.
Energy
■■■
Winter fuels outlook Average household expenditures for heating oil and natural gas will increase by 19 percent and 15 percent, respectively, this winter compared with last winter, according to the federal government’s Energy Information Administration. Projected household expenditures are 5 percent higher for electricity and 13 percent higher for propane this winter. Average expenditures for households that heat with heating oil are forecast to be higher than any previous winter on record. According to the National Oceanic and Atmospheric Administration’s most recent projection of heating degree days, the northeast, Midwest, and south will be about 2 percent warmer than the 30-year average, but still 20 percent to 27 percent colder than last winter. Projected residential heating oil prices average 2 percent higher and natural gas prices 1 percent higher this winter. Winter average electricity and propane prices average about 2 percent and 4 percent lower than last winter, respectively.
Domestic crude production up U.S. total crude oil production will average 6.3 million barrels per day (bbl/d) in 2012, an increase of 0.7 million bbl/d from last year. Projected U.S. domestic rude oil production increases to 6.9 million bbl/d in 2013, the highest level of production since 1993.
Real GDP up 2.2 percent Forecast U.S. real gross domestic product grows by 2.2 percent this year and by 1.7 percent next year. Projected world oil-consumption-weighted real GDP grows by 2.7 percent and 2.5 percent in 2012 and 2013.
High crude prices fall Brent crude oil prices should fall from recent highs over the rest of 2012, averaging $111 per barrel over the fourth quarter of 2012 and $103 per barrel in 2013. EIA expects WTI spot prices to average $93 per barrel in 2013, with the WTI discount to Brent narrowing to $9 per barrel by the end of 2013.
8 • november 2012 • MN Valley Business
Lots of natural gas Natural gas working inventories ended September 2012 at an estimated 3.7 trillion cubic feet, about 8 percent above the same time last year. EIA expects the Henry Hub natural gas spot price, which averaged $4 per million British thermal units in 2011, to average $2.71 in 2012 and $3.35 in 2013.
Renewable fuels decline After growing by 13.9 percent in 2011, total renewable energy consumption is projected to decline by 2.3 percent in 2012. This decrease is the result of hydropower use falling by 13.8 percent as it begins to return to its long-term average. The decline in hydropower from 2011 to 2012 more than offsets the projected growth in the consumption of other renewable energy forms. Renewable energy consumption increases 2.4 percent in 2013 as hydropower continues to decline (2.3 percent) but non-hydropower renewables grow by an average of 4.8 percent. Under current law, federal production tax credits for windpowered generation will not be available for turbines that begin operating after the end of 2012. Wind-powered generation, which grew by 26 percent in 2011, is forecast to grow an additional 16 percent in 2012. The outlook for wind capacity additions and generation in 2013 will likely depend on whatever decision is made regarding the extension of production tax credits.
Ethanol hit by drought As a result of drought conditions depressing corn harvests throughout the Midwest, fuel ethanol production fell from an average of 890 thousand bbl/d during the second quarter of 2012 to an average of 820 thousand bbl/d in the third quarter 2012. Ethanol production will remain near current levels through the first half of 2013 and recover in the second half of 2013, averaging 850 thousand bbl/d (13.03 billion gallons) for the year. The projected lower ethanol production is generally matched by lower ethanol exports. Biodiesel production averaged about 63 thousand bbl/d (0.97 billion gallons) in 2011. Forecast biodiesel production averages 67 thousand bbl/d in 2012 and 83 thousand bbl/d in 2013, with biodiesel blending meeting the Renewable Fuel Standard requirements of 1.0 billion gallons and 1.28 billion gallons respectively in those years.
CO2 emissions decline After declining by 2.3 percent in 2011, fossil fuel emissions are projected to further decline by 2.7 percent in 2012. This decline is followed by an increase of 1.9 percent in 2013. Petroleum emissions fall by 1.4 percent in 2012 and grow 0.2 percent in 2013. Natural gas emissions rise by 5.2 percent in 2012 and fall by 0.4 percent in 2013. Coal emissions decline 9.7 percent in 2012, but are projected to rise by 6.0 percent in 2013 as rising natural gas prices lead to increases in coal-fired electricity generation.
Initial unemployment claims
Minnesota initial unemployment claims
Business Barometers
Nine-county Mankato region
Major industry
September ’11 ’12
Construction Manufacturing Retail Services Total*
132 147 54 234 567
Percent change ’11-’12
78 203 42 156 479
-40.9% +38.1% -22.2% -33.3% -15.5%
2011
2012
130,000
Minnesota non-farm jobs
2,000
110,000
1,000
M
A
M
-3.5% +20.6% -15.9% +8.4% +2.4%
2011
J
J
A
Local number of unemployed
S
O
N
2011
Nine-county Mankato region
D
2012
J
F
M
A
M
J
J
A
S
O
N
D
Minnesota number of unemployed 2011
7,111 6,473
10,000
0
2012 2,803.5 2,821.3
3,000
120,000
F
2,692 2,340 1,112 4,483 10,627
(in thousands)
126,260 126,449
J
2,791 1,941 1,508 4,135 10,375
Percent change ’11-’12
Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don't equal total because some categories not listed.
Nine-county Mankato region
100,000
September ’11 ’12
Construction Manufacturing Retail Services Total*
Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don't equal total because some categories not listed.
Local non-farm jobs
Major industry
2012
175,925 156,562
225,000
8,000 200,000
6,000 4,000
175,000
2,000 0
J
F
M
A
M
J
J
A
S
O
N
September
2011
Unemployment rate
4.9%
4.6%
55,338
56,091
2,866
2,687
2012
Source: Minnesota Department of Employment and Economic Development
10 • november 2012 • MN Valley Business
J
F
M
County/area
(includes all of Blue Earth and Nicollet Counties)
Number of unemployed
150,000
A
Unemployment rates
Mankato/North Mankato Metropolitan statistical area
Number of non-farm jobs
D
Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan Minneapolis/St. Paul Minnesota U.S.
M
J
J
A
S
O
N
D
Counties, state, nation Sept. 2011 Sept. 2012 5.1% 4.5% 5.8% 6.4% 5.8% 4.6% 4.5% 5.3% 5.8% 5.9% 5.8% 8.8%
4.6% 4.5% 5.3% 5.8% 5.1% 4.5% 4.5% 5.1% 5.7% 5.3% 5.3% 7.6% J. Malmanger
Residential building permits Mankato 2011
2012
Residential building permits North Mankato (in thousands)
2011
$3,000
$1,636.3 $2,239.4
2012
$8,000 $2,000
$6,000 $4,000
$1,000
$2,000 $0
J
F
M
A
M
J
J
A
S
O
N
D
Source: City of Mankato
J
F
M
A
M
J
J
A
S
O
N
D
Source: City of North Mankato
Existing home sales: Mankato region 2011
2012
250
Information based on Multiple Listing Service and may not reflect all sales
159 144
200
Housing starts: Mankato/North Mankato 2011
Includes single family homes attached and detached, and townhomes and condos
2012
40
34 7
30
150
20
100
10
50 0
$0
J
F
M
A
M
J
J
A
S
O
N
D
Commercial building permits Mankato $9,000
J
F
M
A
M
J
J
A
S
O
N
D
Source: Cities of Mankato/North Mankato
Source: Realtors Association of Southern Minnesota
2011
0
2012
(in thousands) $8,921.3 $1,865.2
Commercial building permits North Mankato (in thousands) $12,000
2011
$268.9 $321.4
2012
$9,000
$6,000
$6,000 $3,000 $0
$3,000 J
F
M
A
M
J
J
A
S
O
N
D
2011
County
2012 4.1%
5.0% 4.5% 4.0%
3.4%
3.5% J
F
M
Source: Freddie Mac
F
Foreclosures:
Interest rates: 30-year fixed-rate mortgage
3.0%
J
M
A
M
J
J
A
S
O
N
D
Source: City of North Mankato
Source: City of Mankato
5.5%
$0
A
M
J
J
A
S
O
N
D
Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan
2012 second quarter 2011 2012 48 10 8 32 13 17 14 10 4
41 13 10 26 13 14 19 16 3
Percent change -14.6% +30% +25% -18.8% 0% -17.6% +35.7% +60% -25%
Source: Minnesota Foreclosure Partners Council J. Malmanger
MN Valley Business • november 2012 • 11
Business Barometers
$10,000
(in thousands) $5,247 $2,922.2
Vehicle sales 2011
Business Barometers
Sales tax collections
Mankato — Number of vehicles sold 1,050 2012 843
1,200
$500
1,000
Includes restaurants, bars, telecommunications and general merchandise store sales. Excludes most clothing, grocery store sales.
$363.6 $383.6
$400
800
$300
600 400
$200
200
$100
0
Mankato 2011 2012
(In thousands)
J
F
M
A
M
J
J
A
S
O
N
$0
D
Source: Sales tax figures, City of Mankato
Lodging tax collections 2011
$50,000
2012
J
F
M
A
M
J
J
A
S
O
N
D
Source: Sales tax figures, City of Mankato
Mankato food and beverage tax
Mankato/North Mankato $32,533 $40,220
2011
$75,000
$40,393 $37,663
2012
$40,000 $50,000
$30,000 $20,000
$25,000
$10,000 $0
J
F
M
A
M
J
J
A
S
O
N
Source: City of Mankato
D
$0
J
F
M
A
M
J
J
A
S
O
N
D
Source: City of Mankato J. Malmanger
Stocks of local interest
Gas prices-Mankato 2012
2011
$4.00
$3.49
$3.00 $2.00
$338
$1.00 $0
J
F
M
A
M
J
J
A
S
O
N
D
2012
2011
$3.47
$3.00 $2.00
$3.46 (2011)
$1.00 $0
J
F
M
Source: GasBuddy.com
A
M
Oct. 22
Percent change
Archer Daniels
$27.19
$27.21
+0.7%
Ameriprise
$56.66
$57.03
+0.7%
Best Buy
$18.58
$16.88
-9.1%
Crown Cork & Seal
$37.04
$37.25
+0.6%
Fastenal
$42.68
$44.12
+3.4%
General Growth
$19.91
$19.04
-4.4%
General Mills
$39.30
$39.35
+0.1%
HickoryTech
$10.44
$10.39
-0.5%
$1.71
$1.50
-12.3%
Itron
$45.34
$41.25
-9.0%
Johnson Outdoors
$21.18
$20.39
-3.7%
3M
$90.81
$88.95
-2.0%
Target
$64.38
$62.19
-3.4%
U.S. Bancorp
$33.94
$33.36
-1.7%
Wells Financial
$16.85
$18.65
+10.7%
Winland
$0.42
$0.46
+9.5%
$27.93
$27.91
-0.1%
Hutchinson Technology
Gas prices-Minnesota $4.00
Sept. 12
J
J
A
S
O
N
D
J. Malmanger
12 • november 2012 • MN Valley Business
Xcel
J. Malmanger
Lessons learned from the 2012 drought Agricultural Outlook
C
orn and soybean harvest for 2012 is now completed in most areas of the Midwest, much of which was severely impacted by the 2012 drought. The 2012 drought has been compared to the most recent previous large-scale drought in the United States in 1988, and there have even been comparisons to the Dust Bowl years of the 1930’s. The agricultural impacts of the 2012 drought probably depend on what part of the U.S. your farm or ranch is located. Anytime we have a major disaster, such as the 2012 drought, it is always good to review what happened or didn’t happen, and to use those findings to strategize for the future. Following are observations relative to the drought that can help the agriculture industry for the future: Genetic advancements in seed technology Based on most analogies, the 2012 drought in the major corn and soybean producing areas of the U.S. was more severe than the drought of 1988. Currently, USDA is estimating the 2012 national average corn yield at 122 bushels per acre, which would be the lowest national average yield since 1995. Interestingly, the average U.S. corn yield in 1988 was only 84 bushels per acre. This shows not only the ongoing yield improvement that has been made for the past few decades in the corn hybrids that are available today, but also the genetic improvement that has been made to help corn be more tolerant of drought and other stresses during the growing season.
Impact of modern farming practices If the drought conditions in 2012 have been the most severe since the 1930’s, why have we not seen the Dust Bowl like conditions that existed in that era? The main reasons are the efforts in the U.S. to protect our natural resources, and the fact that the farming practices of today are far superior to previous generations in preventing soil erosion. Federal programs such as the Conservation Reserve Program, wetlands restoration programs, and grassland protection programs have helped keep some of the most fragile land out of production. Crop farming practices utilized by today’s producers have also greatly enhanced the protection of our soil,
which along with water, are the most important natural resource for topquality crop production. There are many more farmers utilizing no-till or minimum tillage methods to produce their crops today. Importance of federal crop insurance In states like Iowa, Illinois, and Indiana, which were among the hardest hit by the 2012 drought, the availability of revenue-type crop insurance products will help ease the financial impact of this year’s drought. The revenue-type insurance products are based on both yield and price. By comparison, well over 80 percent of the U.S. corn producers carry some type of crop insurance in 2012, compared to only 15 percent of the nation’s corn producers in 1988. Crop insurance proceeds do not create a windfall for farm operators, as some critics have stated, and insurance indemnity payment rarely match the income that could be achieved with a normal crop production. However, crop insurance payments do help producers cover the expenses from the 2012 crop that was lost due to the drought, and gives them the ability to access adequate credit needs to purchase crop inputs for the 2013 crop. Hopefully, a strong crop insurance program can be maintained when a new Farm Bill is finalized in 2013. Risk management needed for livestock The biggest financial impact of the drought will likely hit livestock producers. Corn costs rose nearly 50 percent, and soybean meal costs were up about 35 percent, during a six to eight week period this past summer. The estimated cost of production for pork producers for the third quarter of 2012 rose to an estimated at $72 per cwt., and is projected to only drop slightly in the coming months. Based on hog prices in recent months and hog futures prices for the next few months, producers expect to lose about $20-$40 per hog marketed in the last half of 2012 and during the early portion of 2013. Similarly, the sharply higher feed costs are projected to result in large financial losses for the fed cattle and dairy industries in the coming months. The higher feed costs, along with limited hay supplies and poor pasture conditions, has lead to liquidations of beef and dairy cow herds, and reductions in sow numbers. This has put even
14 • November 2012 • MN Valley Business
By Kent Thiesse more short-term impact on livestock prices, and reduced profitability for producers. The situation has once again pointed out the need for a risk management program for livestock producers that provides the same type of safety-net that crop producers have available through Federal Crop Insurance. Difficult decisions in grain marketing Grain prices rose to record high prices this past summer, reaching harvest prices near $8 per bushel for corn and over $17 per bushel for soybeans in southern Minnesota. As of midOctober, current local cash grain prices have moderated to near $7.25 per bushel for corn and below $15 per bushel for soybeans, which are still a very good prices. Harvest grain prices for the Fall of 2013 are near $5.75 per bushel for corn and $12.50 per bushel for soybeans in south central Minnesota. Many farm operators did not market a lot of their corn and soybeans at the top price levels, as they started marketing their grain last spring and early summer, before the major drought occurred, as a risk management approach. A lot of corn in the region was forward priced at $4.75-$5.50 per bushel in May and June, and the soybeans at $12-$13 per bushel, which seemed like good prices at the time. For most corn and soybean producers in Minnesota the strong prices will result in a very profitable year for crop production in 2012. MV Kent Thiesse is a farm management analyst and vice president, MinnStar Bank, Lake Crystal. He can be reached at (507) 381-7960 or kent.thiesse@minnstarbank.com
Corn prices — southern Minnesota 2012
2011
$8.00
Soybean prices — southern Minnesota
(dollars per bushel) $7.42
$12.00
$4.00
$8.00
$6.03
$2.00 J
F
M
A
M
J
J
A
S
O
N
D
Source: USDA
$0
2012
2011
M
A
M
J
J
A
S
O
N
D
$22.00
$90.00
$20.00
$80.00
$83.32
$70.00 F
M
A
Source: USDA
M
J
J
A
S
O
N
D
$23.58
$18.00
$19.59
$16.00 $14.00
J
F
M
A
121 E. Main St. Ste 311 Mankato, MN 56001
M
J
J
A
S
O
N
D
Source: USDA. Based on federal milk orders.
Corn and soybean prices are for rail delivery points in Southern Minnesota. Milk prices are for Upper Midwest points.
507-625-4606
Minimum prices, class I milk Dollars per hundredweight
2012
2011
$24.00
$90.86
J
F
Milk prices
185 pound carcass, negotiated price, weighted average
$100.00
$60.00
J
Source: USDA
Iowa-Minnesota hog prices $110.00
$14.97
$4.00
J. Malmanger
Business Barometers
$16.00
$6.00
$0
2012
2011
$20.00
(dollars per bushel) $12.01
Updates: Business news, local relevance
■ ■
Walmarts to outnumber Target in Minnesota
■
Wal-Mart Stores Inc. is pushing its expansion into the home turf of longtime rival Target Corp. The Pioneer Press reports on the growing number of Walmarts popping up around the Twin Cities. A Walmart SuperCenter opened in Lakeville and another three stores opened in Burnsville, St. Cloud and Redwood Falls recently. More are on the way, and for the first time Wal-Mart will have more stores in Minnesota than Target. Analysts say they expect both Wal-Mart and Target to get more aggressive as Target defends its position and Wal-Mart looks to unseat it.
Reuters reported that the board of General Growth Properties Inc rejected Bill Ackman’s call for the company to consider selling itself, saying its shareholders would be best served by the Company sticking to its current business plan.
ADM makes $2.8 billion bid on GrainCorp
Updates
■
Archer Daniels Midland Co. has offered to buy Australian grain handler GrainCorp for about $2.77 billion. GrainCorp says it is considering the non-binding offer, which values it at $12.13 (U.S.) per share. ADM already owns 14.9 percent of GrainCorp. Archer Daniels Midland has said that it wants to invest in overseas suppliers. Australia is a major exporter of many commodities, from minerals such as iron ore to agricultural goods like wheat. ADM’s revenue rose 10 percent to $89 billion in its latest fiscal year, which ended in June. But the company has warned that its operations will be hurt because a severe U.S. drought this year. ■
Fastenal earnings up 12 percent
Fastenal Company reported diluted earnings of 37 cents per share in the third quarter of 2012, up 12.1 percent year over year, attributable to double digit top-line growth. The company’s earnings were in line with the Zacks Consensus Estimate. The company reported net sales of $802.6 million in the third quarter of 2012, up 12.2 percent year over year. ■
Target to sell credit card portfolio
Target Corp. announced it has reached an agreement to sell its entire consumer credit card portfolio to TD Bank Group for an amount equal to the gross value of the outstanding receivables at the time of closing. Target’s portfolio currently has a gross value of approximately $5.9 billion. In addition, the two companies entered into a seven-year program agreement under which TD will underwrite, fund and own future Target Credit Card and Target Visa receivables in the United States. Under the program agreement, TD will control risk management policies and regulatory compliance and Target will continue to perform account servicing functions. The deal is expected to close in the first half of calendar 2013.
16 • november 2012 • MN Valley Business
General Growth rejects call for selling itself
■
3M meets analysts estimates
3M Co. posted third-quarter earnings of $1.65 per share, meeting analyst estimates, though its sales of $7.5 billion were down slightly year-over-year and missed Wall Street expectations. It also cut its 2012 outlook based on rising acquisition costs and a stronger dollar. The Maplewood-based company said its operating income was $1.16 billion, a 6 percent increase over the same period a year ago. Sales were $7.5 billion, down 0.4 percent. Analysts had expected earnings of $1.65 per share on sales of $7.63 billion. 3M has cut its full-year outlook: The company now thinks it will earn $6.27 to $6.35 per share for all of 2012, below earlier forecasts of $6.35 to $6.50. The Wall Street Journal reports that, though 3M trimmed its expenses during the quarter, organic sales growth — which excludes acquisitions and changes in prices and currency — was up just 2.2 percent. The company is shooting for 7 to 8 percent organic growth. ■
Supervalu has interested buyers
Supervalu says several potential buyers are showing interest in the grocery chain’s stores. The Supervalu board is considering the sale of all — or parts — of the struggling company. But in a conference call with investors, CEO Wayne Sales did not identify any parties that have inquired. Analysts say Supervalu is a middle-market grocer that can’t compete with high-end stores on service and quality or match discounters like Walmart and Target on price. Supervalu Thursday reported a net loss of $111 million for the quarter ending Sept. 8. The loss reflects charges related to store closings, falling sales and price cuts aimed at winning back consumers. Supervalu owns and operates about 1,500 grocery stores across the country, including 44 Cub Foods stores in Minnesota. Morningstar analyst Michael Keara says parts of Supervalu perform well enough to attract buyers. But he doubts there’ll be interest in the many Supervalu-owned stores that are struggling to compete. ■
Mayo ranked No. 3 in nation
Mayo Clinic ranked near the top of the U.S. News & World Report annual America’s Best Hospital list, earning the No. 3 overall spot. Mayo Clinic in Rochester also was rated best in the nation in three clinical areas — gynecology, diabetes and endocrinology, and gastroenterology.
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Special Focus: Managing health
■
Minnesota ahead in health insurance reform By Marie Wood
Dan Weir
T
he single biggest expense for employers after payroll is health insurance. Employers are continuously looking for ways to lower their costs and still provide coverage. Meanwhile health care costs are expected to rise 7.5 percent in 2013 according to Reuters.com. Employers are paying higher premiums to hang on to their plans and employees are shelling out more from their paychecks and pockets. “Health care costs have doubled in the past 10 years and are expected to double again over the next 10 years,” said Dan Weir, president of Employee Benefits & Insurance Services in Mankato.
A
s employers prepare for 2014, “2013 will be a year of planning,” says Dan Weir, president of Employee Benefits & Insurance Services in Mankato.
Cost-benefit analysis Weir recommends running a cost-benefit analysis to determine if it’s more economical to cover your employees or to drop health coverage and pay the $2,000 fee for each employee over the first 30 employees. “The disadvantage to employees is that they may lose pretax premiums,” said Weir. Affordability tests Weir advises running 9.5 percent affordability tests for your employees to identify employees that can benefit from the Exchange. If the employee’s cost for single coverage exceeds 9.5 percent of their salary noted on their W-2 compared to the employee’s cost for single (employee only) coverage based on the employer’s lowest cost plan that meets the minimum essential coverage and including total household income; the
18 • november 2012 • MN Valley Business
As a consultant to public sector employers, Weir is an expert on insurance law, employee benefits and employerprovided health insurance. Weir holds a Juris Doctor degree from the William Mitchell College of Law in St. Paul. Beginning in 2014, employers with more than 50 employees must comply with the Patient Protection and Affordable Care Act. The Act is designed to cover more Americans and make coverage more affordable for employers and employees. “There is a lot of uncertainty by employers who are waiting for the final rules and regulations,” said Weir. According to Weir, the good news for Minnesota is that our state has already experienced health care reform in 1992 with the passage of Minnesota Care. The legislation provided subsidized insurance and enacted health care principles. The reform required that insurance carriers be non-profit which gave rise to four dominant carriers: HealthPartners, Preferred One, Medica and BlueCross BlueShield of Minnesota. All are regulated by the Minnesota Department of Commerce. “We’ve been a leader in health care, a leader in health care reform,” said Weir. Many features of federal health care reform were part of Minnesota reforms. State law already requires small group coverage to be sold and renewed on a guaranteed issue basis, which means carriers must issue and renew coverage to any small employer regardless of past claims or employee health conditions. . MV
employee may qualify for a lower cost plan from the Minnesota Exchange. Managing health coverage costs There are a number of strategies to manage health care costs. According to Reuters.com, health plans with higher deductibles and co-pays for workers tend to dissuade unnecessary purchases and offer lower premium costs for employers, while wellness programs can reduce the need for medical services. High deductible plans High deductible plans are a cost-effective way to provide major medical coverage. For example, employees receive coverage for medical care after they meet a deductible of $3,000 for a single person or $6,000 for a family. “Here is something you can offer employees as an option,” said Weir. The advantage is low premiums, but the disadvantage is out-of-pocket costs. These plans can be a cost saver for healthy
care coverage costs
What the Affordable Care Act means to employers By Marie Wood
Minimum essential coverage
According to the Minnesota Department of Commerce, employers with 50 or more employees will pay an assessment if they don’t offer health insurance coverage or if they offer coverage that isn’t affordable. Employers with 50 or more employees that do not offer minimum essential coverage would pay $2,000 for each employee over the first 30 employees. Employers that do offer minimal essential coverage but have at least one full-time employee receiving subsidized coverage under an Exchange would pay whichever is less: $3,000 for each employee receiving a premium credit or $2,000 for each full-time employee beyond the first 30. Minimum essential coverage must include a basic benefit package including hospitalization, outpatient services, maternity care, prescription drugs, emergency care and preventive services.
Exchange
The Act creates “American Health Benefit Exchanges” in each state to assist individuals and small businesses in comparing and purchasing qualified health insurance plans. Exchanges will determine who qualifies for subsidies and make subsidy payments to insurers. Employers with fewer than 50 employees will be able to enroll their employees in coverage through an Exchange individuals and families. Should a major medical issue arise, they are covered. “By offering a high deductible plan, you keep healthy people in your plan. Employers want healthy people, because their overall costs are lower and that helps pay coverage costs for others,” explained Weir. Defined contribution Defined contribution is an excellent option for small employers. For example, an employer may choose to contribute $4,000-5,000 annually to each employee. Then the employee may pick a plan from a menu of three to four plans from a single carrier. Employees can choose low premiums with high deductibles and vice versa. “National insurance companies are promoting defined contribution. In Minnesota, we had more high deductible plans earlier so defined contribution may have a slower growth here than the rest of the country,” said Weir. Wellness programs According to “News Reports,” monetary incentives to employees who participate in health improvement and wellness programs increased dramatically in 2011. The use of monetary incentives for participating in disease management programs almost tripled.
beginning in 2014. According to HealthCare.gov, the Exchange may offer a better choice of plans and insurers at a lower cost.
Affordability of coverage
Coverage under an employer-sponsored plan is affordable if the employee’s required contribution does not exceed 9.5 percent of the employee’s household income for the taxable year. The U.S. Department of Treasury and IRS expect to propose a safe harbor permitting large employers to measure the affordability of coverage based on the employee’s W-2 wages only. MV
Online resources
Minnesota Department of Commerce explains what federal health care reform means to Minnesota. Choose insurance and health insurance reform. Healthcareandyou.org answers questions about the Affordable Care Act. HealthCare.gov offers key features of the law, timeline and implementation. IRS.gov explains eligibility for health care tax credits. Search health care tax credits. For instance, employees who participate in health screenings for blood pressure, body mass index, blood sugar, nicotine and cholesterol learn their biometric measures and how these numbers relate to their overall health and risk for heart disease and diabetes. In an outcome-based program, employees that meet acceptable ranges for these measures receive money toward health care costs. “Employers can start focusing on offering employees the tools to help themselves improve their health. Activity-based programs are not as effective as outcome-based” said Weir. Activity-based programs may be pedometer programs, tobacco cessation, Weight Watchers or exercise classes. Employers can reward participation or go the extra step and reward employees who lower their BMI, blood pressure, cholesterol or become tobacco-free with outcome based programs. Flexible spending accounts Weir recommends flex spending accounts to help employees set aside pre-taxed dollars for health care spending. The IRS has reduced the amount to $2,500 that families can put in their flex spending account beginning in 2013. MV
MN Valley Business • november 2012 • 19
Business Commentary
Financing partnerships give start-ups a needed boost
W
hen I was representing southern Minnesota in Congress, I would describe our region as home to Red Wing Shoe, Mayo Clinic, Hormel Foods, and the Valley of the Jolly Green Giant. These are all home-grown enterprises that expanded and prospered and are recognized across the country and the world. Today, southern Minnesota is still producing impressive businesses that are creating thousands of jobs while providing quality goods and services. I am confident that many of these businesses will also someday be known throughout the world. Obviously, we know that small businesses are the lifeblood of our local communities. Not only do they provide jobs, they also contribute to the quality of life. As I travel throughout southern Minnesota, I notice the vibrancy created when there’s a small café, grocery store, car repair shop, or beauty salon on Main Street. These small businesses provide needed services along with a connecting place — a sense of community — for the folks who live there. Many other local businesses are manufacturing valuable, high-tech electronic and machining products that are marketed across the nation and beyond. We know from our experience that many of these small business operations will grow into large corporations that can last for generations. A few months ago, Mark Davis and his sons hosted our Foundation’s Leadership Circle at their operations in Le Sueur. Mark told the story of how their now large cheese-making business grew from his father’s local butter-making business. Today their enterprises include Davisco Foods International (the $700 million dairy processor), Cambria (the counter-top manufacturer) and Northern Plains Dairy (a modern, large-scale, eco-friendly dairy farm). In all, these businesses employ over 850 people in the area. That’s a lot of economic stimulus from one entrepreneurial family. Davisco is certainly on track to become one of our region’s world-renowned enterprises. When I visit the many communities where our foundation has invested in assisting local businesses, I hear stories of how our dollars helped foster business success. Over the past 26 years, Southern Minnesota Initiative Foundation (SMIF) has financially supported over 460 businesses by investing $24 million dollars, while leveraging an additional $147 million dollars of financial support to these businesses. We have also provided close to 17,000 hours of technical assistance for both our loan partners and other small businesses in our region. For some, this remedial assistance has made them loan-ready with either SMIF or a bank. For others, this assistance has pointed out that this may not be the right time to get into business or expand. We know that absent this technical assistance, many of these businesses would not have succeeded. In total, because of SMIF’s lending, there are over 7,000 jobs supported in our southern Minnesota region. We know that SMIF’s collaboration with banks, communities, and economic development organizations is making business growth a reality in our communities. Throughout the 2012 election season, there was one thing we constantly heard: we need jobs. Clearly, the answer to the job issue is investments in business start-ups and small
20 • november 2012 • MN Valley Business
■ “It’s interesting —
By Tim Penny
and gratifying— that despite today’s troubled economy, SMIF continues to hear from people who want to start or expand a business.”
business growth. SMIF’s lending is a “tool in the toolbox” to compliment the work of banks and other regional economic development partners, as together we invest in job-creating businesses. It’s interesting — and gratifying — that despite today’s troubled economy, SMIF continues to hear from people who want to start or expand a business. And often through our loan programs, we are able to offer assistance. In 2012 alone, we provided 22 Small Enterprise Loans, and seven “gap” funding loans. Our Small Enterprise Loan program provides up to $35,000 to support small business owners or start-up entrepreneurs. The businesses this loan program supports are in the manufacturing, retail, service, and local foods industries. In addition, our Business Loan (or “gap”) program can offer up to $200,000 to “fill the gap” between available and necessary financing in partnership with local lenders, economic development organizations, and government agencies. SMIF’s lending dollars can be used for working capital, machinery/equipment, inventory, supplies, or building and land. We also provide a limited number of Seed Fund Awards (up to $25,000) to support seed and start-up stage businesses that need additional capital — generally for prototype development or patents. And all of our loan partners have access to technical assistance and additional classroom training. We welcome opportunities to talk with bankers and entrepreneurs who could benefit from additional financing through our loan programs. During the coming months we will be hosting “Coffee with your Community” events designed as an information exchange for bankers and local EDAs. It’s our hope that these events will give us more opportunities to invest in our local communities. Over the next year, SMIF is highlighting our work to support entrepreneurs. Through our loan programs, as well as through technical assistance and training, we are committed to partnerships that create more business success in southern Minnesota. If you would like more information about our entrepreneur development resources, contact Pam Bishop at 507-455-3215 or pamb@smifoundation.orgx. MV Tim Penny is president and CEO of Southern Minnesota Initiative. timp@smifoundation.org
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Cover Story
A worker turns out aluminum parts at Le Sueur Inc.
Big employers, big impact Some major employers growing fast, some still recovering By Tim Krohn | Photos by John Cross 22 • november 2012 • MN Valley Business
Le Sueur Inc. produces aluminum and plastic-molded parts for customers
Battered by recession Le Sueur Inc. was hit as hard as any business by the Great Recession. The company had 640 employees prior to 2009, but after three rounds of down-sizing employment fell to 350. Today the numbers have climbed to 450.
Le Sueur Inc. can produce a wide range of parts for its diverse customer base.
MN Valley Business • november 2012 • 23
Cover Story
S
mall businesses dominate the area in sheer numbers. There are more than 2,400 businesses that have just one to four employees, while just six private companies employ 500 or more employees each. But major employers have an unparalleled overall economic impact and offer insight into the economic health of the area. In Blue Earth and Nicollet counties, the impact of public sector/non-profit employment can’t be overstated. Of the 10 largest employers in the region, only two — Carlson Craft Social and Carlson Craft Commercial — are purely private businesses. Two — Mankato Clinic and top employer Mayo Clinic Health System-Mankato — are health care facilities. The St. Peter Regional Treatment Center is a state-operated facility for the mentally ill and for dangerous sex offenders. The Thro Co., while privately owned, has its rates set largely by the government and is heavily regulated. Three top employers are education facilities — MSU, Gustavus and Mankato Public Schools. And Mankato Rehabilitation Center is a non-profit. Got to the next 10 largest employers — who employ between 300 and 640 people each — and the private sector reigns: Le Sueur Inc., Verizon Wireless, Kato Engineering, Precision Press, Taylor Corp. Administrative, MICO and Hickory Tech among them. For both public and private sector employers, the weight of the recession still pressures hiring, but slow — and sometimes strong — growth is prevalent.
The Le Sueur-based business is an aluminum foundry, aluminum die caster and plastic moldings firm that makes parts for use by other companies, such as Caterpillar. Dick Seidenstricker, Chief Operating Officer, runs the company for brother and sister owners Mark and Janet Mueller. It’s a company their grandfathers started as a sand foundry 66 years ago. Seidenstricker, who started in late 2009 after most of the layoffs, said the owners admit they didn’t realize how quickly business would spiral down. “They admit they were slow to react and when they did react, they didn’t realize how deep (the recession) was going to be.” He said the company didn’t lose customers, the customers just stopped ordering as many parts when the recession hit. “So instead of ordering 1,000 they ordered 500. We were down 35 or 40 percent,” Seidenstricker said. “But when things came back our customers were putting in a lot of inventory so it boosted us a lot. Revenues are up about 11 percent for the fiscal year.” Still, Seidenstricker said he’s recently been hearing some disturbing news. “Just in the last 45 to 60 days, a lot of our customers have acknowledged they’ve seen softening in their orders. Some will be idling their plants for a week or two late this year or early next year. We’re being told to push orders out into the months ahead.” Seidenstricker said Le Sueur Inc. is in a better position to deal with such ups and downs because it’s made a concerted effort to hire more employees through temp agencies. Those working through a temp agency account for 10-15 percent of the company’s workforce. “Working with the temp agency has had several benefits. They are better at recruiting qualified employees and doing better background checks.
Cover Story
During the recession, customers of Le Sueur Inc. started ordering far fewer parts, leading to job losses at the plant. “It allows us to be more flexible by cutting down on temps during slower times and not impacting the paychecks of our permanent employees.” He said such flexibility is vital as a number of uncertainties loom. “There’s uncertainty in Europe, uncertainty about China’s growth, uncertainty about the fiscal cliff and a lot of other things. “We have to be much more diligent and watchful, which is one reason we went more with the temp hiring so we can be much more nimble no matter what happens to us.” Ringing up business Few if any local businesses have been hiring more or faster than Verizon Wireless. When the cell phone company bought Alltel (which had earlier bought out Mankato based Midwest Wireless) in 2008, Verizon expanded it’s Mankato call center. Verizon employs 540 in Mankato. “We are continuing to have opportunities for people to join us, we are hiring,” said
Pam Michelson, HR manager. “We’re getting good response to our ads. We will be starting two more groups of 15 each this year. We start everyone at same time and we have a very extensive training program.” The company expects to hire another 15 early next year and likely more as the year goes on. Michelson said the company has had good responses from qualified candidates in recent years. “We are a leading technology company so that’s of interest to people coming to work for us as well, to be able to learn and work on that technology.” The constantly changing technology means almost constant training for employees, who have to be familiar with a variety of technical issues or know about various services customers may call about. “We have training on new devices and accessories that can be almost weekly.” Although Verizon has 23 call centers around the United States, the Mankato center fields calls that can come from
Verizon’s call center in Mankato has been adding staff at a steady pace in the past couple of years.
24 • november 2012 • MN Valley Business
After having to cut the workforce from over 600 to 350, Le Sueur Inc. now has 450 employees.
Offering amenities such as a workout room and expansive, inviting cafeteria helps draw and retain employees at Verizon.
88 percent of businesses employ fewer than 20
Largest employers Employer
Data representative of the Mankato-North Mankato MSA (Blue Earth and Nicollet Counties), as well as the city of Le Sueur. Total Establishments: 4,308 Number of employees 1-4 5-9 10-19 20-49 50-99 100-249 250-499 500-999 1,000
Total Employees: 57,563
Number of businesses
Percent of all businesses
2,407 798 549 309 129 98 12 4 2
56% 19% 13% 7% 3% 2% >1% >1% >1%
Source: Greater Mankato Growth
J. Malmanger
anywhere in the country.
Verizon call center staff get almost constant ongoing training to keep up with technological changes.
Source: Greater Mankato Growth
2,200 1,700 1,400 1,240 1,093 830 682 680 656 653 540 476 450 415 353 342 335 322 310 293 270 262 250 250 250 237 225 225 217 212 210 202 200 194 193 185 185 175 156 155 150 144 142 140 137 135 132 130 125 121 120 120 117 113 110 110 100 100 100 J. Malmanger
MN Valley Business • november 2012 • 25
Cover Story
The Thro Company Chris Thro is in a business whose demand is unaffected by the economy. Thro is president of The Thro Company, which operates several nursing homes, assisted living complexes and related services. The company employs 656 people. “In health care, we’re selling a service people need. When they need it they need it, so the economy hasn’t affected us that way.” That’s not to say the recession and the related budget crisis in state government hasn’t affected the company. “The state determines what we get paid. Going back four or five years, they haven’t allowed any increase in our charges,” Thro said. “Food costs, everything goes up. Inflation hasn’t been huge, but in certain areas things have gone up.” The funding cuts or freezes come through Medicaid payments made to Thro’s company. “The last increase that was allowed by the Legislature was in 2008 and
Number of employees
Mayo Clinic Health System Minnesota State University Mankato Area Public Schools Mankato Rehabilitation Center Carlson Craft Social St. Peter Regional Treatment Mankato Clinic Gustavus Adolphus College The Thro Company Carlson Craft Commercial Verizon Wireless Kato Engineering Le Sueur Inc. Blue Earth County Precision Press MTU Onsite Energy Taylor Corp. Administrative City of Mankato MICO Inc. HickoryTech St. Peter Public Schools St. Peter Community Hospital Bolton-Menk Nicollet County Southern Minn. Construction Carlson Craft Catalog EI Microcircuits Schwickert Company Coughlan Companies South Central College Johnson Outdoors — MinnKota CHS Masterpiece Studios Xcel Energy Minnesota Elevator AgStar Financial Services Minnesota Valley Health Center Le Sueur/Henderson Schools Corporate Graphics International Fine Impressions Scholarship America Carlson Craft Specialty Perfecseal Mankato Winland Electronics Alumacraft Boat Wis-Pak Inc. City of St. Peter Thin Film Technology AEP Industries Dotson Company Davisco International Mapleton Community Home Crysteel Manufacturing Great Papers Michael Foods Egg Products Ridley Affiliated Computer Services Creation Technologies Econofoods
Cover Story
public works we haven’t done much hiring.” Hentges said there has been a conscious effort to keep construction and capital improvement spending stable. “That money goes right into the economy and keeps contractors and some of those folks working.” He doesn’t see the current trend changing any time soon. “Until the economy and growth booms more, starts ramping up, I don’t see us adding. If we add a lot of residential units in the area we do need public works The Thro Company operates several assisted living and skilled-nursing facilities, employees to plow including Laurels Edge in Mankato. streets and handle building inspections. there have been decreases. “Regrettably, you’d hope the Legislature would understand You can’t have growth without servicing it,” Hentges said. “Our growth is slowed some but it’s still pretty good. But it’s putting us in a real pinch. We’re not in a position where we most of the growth has been in-fill so that doesn’t put a lot want to lay off employees or stop offering services. We need to more demand on services. deliver the services to people.” “When we get back to housing project growth like early Thro has three assisted living buildings and four skillednursing facilities (nursing homes). Thro said nursing homes are 2000s then it will change.” Blue Earth County Administrator Bob Meyer said county now used primarily by people recuperating for a time after hip, employment has gone down to just under 400 FTEs from a knee or other surgeries. With the need for many skilled nurses, Thro said hiring is high of 430. “We’ve seen a pretty substantial reduction as the economic always a challenge. “We have such a large number of employees crunch hit and the state budget problems found their way to and some turnover.” us. “We’ve stabilized and are doing very modest staffing Thro works with the High-STEP program at the high schools in which students get orientation in health care careers. increases. For 2013 we have three additional FTEs scheduled if “It lets students see what it takes to work in this business. We the board approves them. That’s less than a 1 percent increase.” As with the city, staff reductions didn’t come through layoffs see quite a few people who go through it and many of them but through attrition and early retirement incentives. have come to us for employment,” Thro said. Meyer said all departments have felt the pinch. “It’s labor intensive and it takes certain type of people to have “There isn’t a county department that hasn’t felt the impact the compassion and see the benefits of doing this.” of the budget cuts. Everyone is working at the minimum The company hires a lot of RN and LPN nurses and Thro staffing levels. When someone is out for leave it’s really difficult said the higher education institutions in Mankato make that to maintain the quality services we have had historically.” easier. After coming off completion of one of the biggest ever “We’re lucky to have Minnesota State and SCC that work county construction projects with the justice center, not a lot is with certification and Rasmussen has certification,” he said. planned for the near future, Meyer said. “We’re fortunate to have a relatively stabled group working “The focus is mostly on maintaining our buildings and for us. They tend to stick with us.” He said the company has been aggressive in remodeling and making modest improvements. One thing on the horizon is a upgrading facilities in the past seven years, “But we’re holding recycling center at the Ponderosa (landfill) for dropping off recycling and garbage to keep people out of the landfill and up a little now.” keep them safe and the workers safe,” he said. One of the biggest recent changes in the county’s governance Public sector austerity role is the recent decision to have all tax levy authority for the While affects of the recession came a bit more slowly to the library in county hands — something Mankato had shared in public sector than the private, staffing reductions occurred and previously. the new normal is tighter budgets. “We’re more focused on the library right now. We’ve done “For five years we’ve been pretty stable in spending and there some strategic planning for moving forward. We have a haven’t been many opportunities for adding staff after reducing community survey on our website for the library to get employment numbers 10 percent,” said Pat Hentges, Mankato city manager. The city has 322 full-time-equivalent employees. information on the needs of the community and we’ll base a “Other than in a few selected areas in law enforcement and plan on that.” MV
26 • november 2012 • MN Valley Business
Eide Bailly Welcomes Ryan Spaude
222 Minnesota Ave S. St. Peter 507-934-3344 www.JuleesJewelry.com
We are pleased to announce that Ryan Spaude, CFP has joined the Mankato office as a Financial Advisor. He brings with him more than 16 years of experience in the financial services field. Ryan will provide financial planning, investment management and insurance services to help clients effectively manage their financial situation. Ryan has an in-depth understanding of financial management issues—as well as a personal touch in the delivery of services, including: s Financial Planning: Cash flow analysis, insurance and risk analysis, education planning and retirement income distribution analysis s Asset Management: Portfolio design, investment management and asset allocation services s Insurance Services: Life insurance, disability insurance and long-term care insurance
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Advancing Business for a Stronger Community
Greater Mankato Growth
Talent Supply & Demand: Next Steps This past spring, Greater Mankato Growth, together with the South Central Workforce Council, Minnesota Department of Economic Development (DEED) and the area’s five higher education institutions, conducted the region’s first comprehensive workforce “Talent Supply & Demand Study,” which compared anticipated employer demand to the region’s talent supply. On May 2, educators, community and business leaders gathered at a “Greater Mankato Talent Symposium” to discuss the results of the study and ways to capitalize on talent in the region. “To have reached the point where we were able to compile this information and convene the individuals who can make an impact, was itself a tremendous accomplishment that provided a springboard for future work. The talent supply and demand report and symposium were an important step in the conversation among businesses, educators and community leaders,” said Jonathan Zierdt, President & CEO of Greater Mankato Growth. Following the symposium, Greater Mankato Growth collected feedback from the participants and others and established a talent steering committee, which has identified several key areas of work where we can increase the effectiveness of leveraging the talent that exists in our community. These general action areas include: • Exposing students, parents and educators to career information and experiences that inform them about existing high demand careers • Letting employers from within and outside the marketplace know about areas where we have a talent surplus • Encouraging continued collaborations between business and education • Promoting the region’s outstanding livability factors to attract and retain talent • Exploring new ways to connect employers and talented employees • Reaching out to community alumni encouraging them to see what the region now has to offer them To be successful, multiple strategies must be developed in each of these areas. Part of the
steering committee’s role is to prioritize these areas of work and strategies, so that they can collectively be working on just a few at a time for maximum effectiveness. Currently, the steering committee is focusing on two key projects. The first project will be the enhancement of a Counseling Training Day to provide regional business and employment information to career counselors, who are helping guide high school students in their career choices. The second project involves the development of tools to help increase internships across the community. This will help more students learn industry skills and make connections with area employers, while giving businesses access to talented students, which could lead to good hires. “These two projects can have a significant impact right from the start, which is why the steering committee chose them,” said Zierdt. “Moving forward, our business, community and education leaders will continue to work together in new initiatives that will support our overall goal of capitalizing on this tremendous asset of talent here in the Greater Mankato region.” For more information, contact Barb Embacher at 385.6644 or bembacher@greatermankato.com.
Greater Mankato Talent Symposium in May
Chamber of Commerce and Economic Development 28 • november 2012 • MN507.385.6640 Valley Business
• greatermankato.com
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Another successful Campus & Community Fair is in the books. The annual fall event put on by Greater Mankato Growth and Minnesota State University, Mankato welcomed more than 1,200 students to the Greater Mankato community. MSU’s Myers Field House was filled with exhibitors from local businesses, non-profits and student clubs and organizations. Students in attendance walked away from the event feeling welcomed by and familiarized with a variety of local businesses and organizations. Businesses and organizations exhibiting also made students aware of internship, part-time employment and volunteer opportunities in the community. Special thanks to presenting sponsor Taylor, our event sponsor Charter and our prize sponsors Pub 500, Toppers Pizza and Mt. Kato.
Greater Mankato Young Professionals at a Mankato MoonDogs game
2012 Program Sponsor:
2012-13 Program Sponsors:
* Photos By Sport Pix
2012-12 Leadership Class
Greater Mankato Growth
The Greater Mankato Young Professionals program provides multiple dimensions of benefits to employees, employers and the community. The program, which currently has 140+ members, gives professionals who are establishing themselves in their careers and the business community an opportunity to meet others. Once Young Professionals get a taste of all there is to do here and establish a network of friends and colleagues in the area, they are more likely to stay and enjoy life in Greater Mankato. According to Eric Leagjeld of accounting firm Abdo, Eick & Meyers, LLP, “Employers have found the program to be a very cost-effective development and retention strategy.” The program focuses on the growth for young professionals in four areas: Professional: Professional development workshops are held every month and cover a variety of topics. Some past topics include generational communication, customer service and networking workshops. Social: Fun-filled social events are held every month and promote networking and relationship development. Popular past events include “murder mystery” dinners, kayaking excursions and sporting events. Mentorship: Mentorship sessions are led by Greater Mankato 2012 Campus & Community Fair area business leaders with groups of Young Professionals. These mentorship meetings transpire over a casual lunch, which allows for enlightening conversation and networking opportunities. Community Service: The Young Professionals are involved in many community service initiatives. Their major project for 2012 is coordinating the Kiwannis Holiday Lights Parade. The 27th Leadership Institute class began in September with For more information on the Greater Mankato Young 40 emerging leaders from a variety of area businesses and Professionals, visit greatermankato.com/young-professionals. organizations. In their first session, the Leadership Institute participants became acquainted with each other and participated in strength focused training. Participants then learned about teamwork and reached new levels of confidence through a variety of outdoor activities at Minnesota State University, Mankato, including reaching new heights in a variety of challenges on the 50’ high ropes course. Those who were exceptionally daring took a “leap of faith” off of a high beam attempting to grab a trapeze bar. Through presentations, hands-on experiences, assessment tools and tours, the Leadership Institute helps participants turn knowledge into action.
Member Activities Upcoming Member Events
5:00 - 7:00 p.m. November 6 Mankato Brewery December 4 U.S. Bank City Center
Greater Mankato Growth
2012 Business After Hours Sponsored by
September Business After Hours hosted by Charter Business
7:30 - 9:00 a.m. November 14 Pathstone Living December 19 Rasmussen College
2012 Business Before Hours Sponsored by
September Business Before Hours at HickoryTech
Business After Hours and Business Before Hours gives representatives from GMG member businesses at the Engaged Level or higher an opportunity to get together with one another to exchange ideas and learn about each other’s businesses. For information on these and other member events visit greatermankato.com/gmg-events.php
30 • November 2012 • MN Valley Business
Cavalier Calls on the Newest Greater Mankato Growth members
PresenceMaker 124 E. Walnut Street, Suite 310, Mankato presencemaker.com
Tandem Bagels 200 East Walnut Street, Mankato tandembagels.com
Thankful for our members! Thank you for your investing in your business and our marketplace through your membership in Greater Mankato Growth over the past year. Remember to renew your membership for 2013 by January 1.
Greater Mankato Growth is teaming up with the South Central Small Business Development Center (SBDC) to celebrate entrepreneurs during Global Entrepreneurship Week November 12-16. During the week, new and emerging businesses can attend classes, learn about new tools and initiatives, access resources abundant in our area and much more. Whether you are an entrepreneur or in an organization or business that serves them, Global Entrepreneurship Week is a great opportunity to efficiently learn about the many resources available in the area. The week kicks off the evening of Monday, November 12, with the official launch of SourceLink from 4:30 – 6:30 p.m. GMG and the SBDC are two of the many organizations throughout southern Minnesota participating in the implementation of SourceLink, a program that utilizes innovative online tools designed to map entrepreneurs to resources. Accompanying the online tools will be an entrepreneur hotline, which will connect entrepreneurs to a regional contact to help link them to the resources they need. The week of activities continues on Wednesday, November 14, with a series of Legal and Accounting workshops from 8:30 – 11:15 a.m. Workshops include Entity Selection & Other Start-Up Issues, Contracts & Agreements, and Intellectual Property Protection. Participants can choose to go to one or all of the workshops. Entrepreneurs will also have the opportunity to stop in for one-on-one advice anytime between 8:00 a.m. to 1:00 p.m. to access the Open Door Accounting and LegalClinics. Entrepreneurship Week activities conclude on Thursday, November 15, with a day dedicated to Business Planning and Education. Agencies that serve entrepreneurs will be offering “Curbside Counseling” from 8:00 a.m. – 1:00 p.m. There will also be classes on Entrepreneurial Essentials, Business Planning Basics and Marketing Basics offered from 8:30 to 11:15 a.m. All Entrepreneurship Week activities will take place at the Greater Mankato Business Development Center, 1961 Premier Drive, Mankato. For more information on the many activities, visit greatermankato.com/events-workshops.
MN Valley Business • november 2012 • 31
Greater Mankato Growth
The Buzz 1850 Adams Street, Suite 532, Mankato facebook.com/thebuzzkato
Celebrating Global Entrepreneurship Week
in Greater Mankato
New Business – The Dork Den 515 North Riverfront Drive, Suite 150
New Owner – Graif Clothing 5 Civic Center Plaza, Mankato
New Business – Le Nails 500 Raintree Road, Mankato
New Location – LJP Enterprises Waste & Recycling 2160 Ringhofer Drive, North Mankato
New Location - Promotions 2000 1005 North Broad Street, Mankato
New Owner – Rodeway Inn 111 Lind Court, Mankato
GR E
ER MANK AT
O AT
Greater Mankato Growth
growth
BUSINESS AWARDS & HALL OF FAME
2012
The Journey to Success
Join us in honoring some of Greater Mankato’s most outstanding businesses and professionals at this special event to be held the evening of November 13 at the Verizon Wireless Center. Learn about this year’s award recipients and R.S.V.P. by November 9 at greatermankato.com/business-awards-hall-fame.
For sizes under 2” use the small version with adjusted TM.
Presented by:
32 • November 2012 • MN Valley Business For sizes above 2” use the regular version with normal TM.
Walking (or Driving) in a Winter Wonderland By Christine Nessler Marketing & Leisure Sales Director When I was a kid from Northern Iowa, we drove up to Mankato during the holidays to see the lights that lit up the neighborhoods of Mary Circle in North Mankato and North Broad Street in Mankato. Ours wasn’t the only family willing to make the journey to the big city. Thousands of people enjoyed those neighborhood displays. Now, as a parent, I have been hard pressed to find a festive neighborhood to take my own kids…until this year. The Kiwanis Holiday Lights presented by the Mankato Area Foundation and CHS in Sibley Park will be filling a void for the Greater Mankato area. Starting November 23 the Kiwanis Holiday Lights will turn Sibley Park into a Winter Wonderland for locals and visitors alike. And that means more holiday spirit and more dollars coming into our local economy. Visitors can walk or drive through the wonderland for free until December 31. All the Kiwanis ask is that people bring a donation of money or canned goods to be distributed to several local food shelves. The Kiwanis club wants to build on traditions of the past, promote our community and help those in need. For their first year of the Kiwanis Holiday Lights they will use one million LED lights in their display, including animated lights and choreographed lights. There will also be Santa Claus and live reindeer, a Tribute to the Troops, decorated trees and fireworks. For those who are walking in the winter wonderland, there are heated restrooms and warming houses. Opening night, held on November 23, will dazzle guests will
The Greater Mankato Convention & Visitors Bureau (CVB) is an affiliate of Greater Mankato Growth (GMG), operated as an LLC under GMC.The CVB is dedicated to the important work of attracting and servicing visitors to Greater Mankato.
MN Valley Business • november 2012 • 33
Greater Mankato Growth
a night of music, food and a holiday parade, complete with illuminated parade floats. Santa will wrap up the parade and flip the switch to turn on Kiwanis Holiday Lights for a spectacular finish. According to Kyle Mrozek, lead volunteer for the Kiwanis Holiday Lights, the holiday lights display in LaCrosse, Wisconsin typically brings in more than 300,000 visitors each year. That event has been going on for well over a decade. Mrozek said he’s hoping the event will bring in at least 50,000 people in its first year and build from there. “The impact will be tremendous,” said Mrozek. “First, it will have a great economic impact on the local economy as a visitor attraction. Second, it will also be a great opportunity for nonprofit groups in our community to get involved, get their group noticed by thousands of people and also allow them to do a bit of fundraising in the process. Third, it will have the potential to collect thousands of food items that will be distributed to the Greater Mankato food shelves.” Vendors and businesses of Greater Mankato understand the benefit of this holiday event, which is why they are joining forces to make it a success. So far more than $110,000 has been raised for the Kiwanis Holiday Lights. According to Mrozek, they would like to see $125,000 to $150,000 donated to the event this year. “We have well over 100 businesses and non-profit groups involved but our presenting sponsors, The Mankato Area Foundation and CHS, are the key partners that gave our fundraising effort the start we needed,” said Mrozek. Thank you to the Kiwanis, the Mankato Area Foundation, CHS and all of the other businesses that are bringing the Holiday Lights to town. Not only will you be giving my kids special memories of holiday wonder, but you’ll also be providing Greater Mankato with an uptick of visitors and spending in the hospitality industry. For more information, visit visitgreatermankato.com or kiwanisholidaylights.com.
Regional Outlook
Isolation helps spur small towns’ retail sales ■ “While the size of the
I
n today’s environment, any discussion of economic development inevitably includes the concept of entrepreneurship and small business development; and such discussions are particularly relevant when assessing rural communities. The relative health of the businesses on Main Street has been a big concern in many rural communities for decades and trying to take the temperature of these businesses is not that easy. Using somewhat crude measures it’s easy to count the number of empty storefronts or closed businesses; but such measures are really not very helpful. However, tracking sales tax receipts is actually a useful measure that is fairly accurate, easy to understand, and the data is collected for you by the Minnesota Department of Revenue. So I was pleased to see a recent study published by Will Craig and Bruce Schwartau from the University of Minnesota that did just that. If the names of Craig and Schwartau seem familiar it’s because I previously mentioned their work in this column back in August. In that earlier study they examined the sales tax revenues of the largest communities outside the Twin Cities metro (Rochester, Duluth, St. Cloud and Mankato) and highlighted the explosive growth and development of Mankato as a regional center. However, in this new study they examine new data released by the Minnesota Department of Revenue for much smaller communities; many as small as 1,000 in population. Accordingly, data for communities of this size really can help us take the economic temperature of rural Main Street. Another interesting fact relative to this new study is that it examines sales tax data from 2003-2009. If you recall, this was not exactly the best years for the Minnesota economy. In fact, state government experienced a significant contraction in 2003 and a subsequent partial government shutdown in 2005. This was then followed by two reasonable years of economic growth before both the financial and housing
community clearly is a factor in determining the amount of sales tax revenue collected, the geographic proximity of alternative shopping By Jack M. Geller, venues is equally important.” Ph.D
sectors crashed in late 2007, leading to the “Great Recession,” which presumably ended in 2009. In fact, according to Craig and Schwartau, between 2003 and 2009 sales tax receipts for the entire state as a whole were down 14 percent, after adjusting for inflation and the 2008 state sales tax increase. With this in mind you can guess that my expectations for how our rural Main Streets might fair during this same period of time were quite subdued. So you can imagine my surprise when the data indicated that many of our rural communities actually faired quite well and in fact some even thrived. What is most interesting to note is that among the largest rural communities (mean population 89,089) the average change in sales tax revenue was -15.7 percent, with only 25 percent of these communities recording an increase in sales tax collections. However, among the smallest communities in the group (mean population 2,502) the average change was a loss half that size (-7.1 percent), but more importantly 54 percent of these small communities actually recorded an increase in sales tax revenue between 2003 and 2009. How can one explain or make sense out of this data? Well looking a bit more closely at this data reveals a very interesting correlation. While the size of the community clearly is a factor in determining the amount of sales tax revenue collected, the geographic proximity of alternative shopping venues is equally important. Allow me to provide a simple example. Aitkin is a community of
34 • november 2012 • MN Valley Business
2,165 residents that is situated approximately 31 miles northeast of Brainerd and 54 miles to the south of Grand Rapids. Given the inconvenience to alternative shopping for their routine needs, businesses in Aitkin collected $2.54 million in sales tax revenue in 2009. Now let’s look Janesville; a community of similar size (population 2,256) but one that is conveniently located 17 miles on a four-lane highway east of Mankato. In 2009, with approximately 100 more residents, Janesville’s businesses collected only $370,000 in sales tax receipts; approximately onesixth of that collected in Aitkin. So what do we make of this new analysis by Craig and Schwartau? Well clearly the good news to be gleaned is that with 54 percent of these small rural communities recording an increase in sales tax revenues between 2003 and 2009, it suggests that many of these small towns are both relevant and resilient even in difficult times. Second, similar to the slogan used regarding the attributes of real estate, location and proximity to alternative shopping venues plays an important role in determining the overall health of our rural Main Streets. MV Geller is professor & head of the Arts, Humanities & Social Sciences at the University of Minnesota Crookston. He also serves as director of the federally funded EDA University Center at UMC. He can be reached at gelle045@umn.edu
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Business Feature Todd and Mary Johnson with sons Eric and Matt (left).
Earl Johnson Furniture: Four generations downtown A person-to-person business By Pete Steiner Photos By John Cross
36 • november 2012 • MN Valley Business
T
he stately, pristine brick structure at the downtown corner of Second and Cherry was empty in 1974. But Mankato’s former Sears Farm Store building had large display windows, an elevator inside, and a location with plenty of traffic. Earl Johnson says it took him five minutes to decide that was the building he should buy to replace his furniture store near the Grand Theater on Front Street. After all, Earl’s store, and the Grand and the Club Royal, along with many other Front Street buildings just south of Main Street, were about to be demolished for what was called “urban renewal.”
Dedicated to downtown
Person-to-person business Todd, now 52, said a consultant advised him about 10 years ago to move to the hilltop, but the cost of moving was prohibitive. Besides, acquiring the old Depot lot had addressed the critical issue of parking. There were still downtown meters at the time, and as Todd puts it, “Shopping wasn’t a pleasant experience (when people were watching parking meters.)” He says, “People find us because of the niche we have,” and he agrees that the success of furniture stores in smaller towns like Amboy, Hanska and Redwood Falls shows that people will support local, family-owned businesses. “It’s a person-to-person business,” Earl chimes in. People he’s known since his days on the farm in Martin County liked dealing with someone familiar. Todd says the store typically sells across a 40- to 60-mile radius, and they’ve furnished homes for long-time clients in Lake Okoboji, Des Moines, Nisswa near Brainerd, and even with one truckload that went all the way to Naples, Florida. The typical buyer, maybe 80 percent of clients, tends to be a woman. At Earl Johnson’s, they’ll find inventory in most price ranges except the bottom end. The key is to always maintain quality. Todd adds, employee knowledge of the product may be the most important sales element, followed by selection, then price. He adds that consistent advertising is important. “When you pull back, business falls off in a few
Business Feature
It was 10 o’clock on a sunny Wednesday morning. Two young mothers, with their Mother, and two young children in tow, were in the store shopping for wall clocks. Todd Johnson, Earl’s son, had asked his father to come join in our discussion. Along with Todd’s son, Matt, the four of us sat on comfortable couches in a corner of the first floor showroom to discuss the furniture business and the history of the store. Earl had grown up on a farm near Fairmont, and had been a successful livestock auctioneer. He was a natural-born salesman, so when he married into the Gosewisch family, even though he knew nothing about furniture, he found success as a manager and buyer from 1959 to 1970 at LeRoy Gosewisch’s store on Front Street. After 11 years, he bought out nearby Smesrud Furniture, which became the original Earl JohnsonÕ’s. Like many an entrepreneur, he worked 14 hours a day to keep things going, and Earl admits the long hours affected his health and his marriage. Then came urban renewal. As the original building on Front Street was about to be taken, Earl made the decision to stay downtown simply because he liked it. In addition, downtown was still the main destination for furniture shoppers
— Landkamers and Minnesota Warehouse Furniture were also in the valley even after the Front Street demolitions. After about 15 years in the brick building, the store underwent an extensive remodeling in 1991, and Earl and son Todd bought the old Bus Depot building across the street in 1993. They made that their bedding store and clearance center. Earl retired from his eponymous establishment in 1995, mostly for health reasons, at the age of 65, leaving his son fully in charge.
Earl Johnson bought the former Sears Farm Store building on the corner of Second and Cherry in 1974 to replace his furniture store, which had been demolished for urban renewal.
Business Feature
months.”
An evolving business Like all businesses, the furniture business continually evolves. Take La-Z-Boy. The brand immediately conjures an inviting recliner in which to sink with beer and chips in hand, to be that lazy boy watching football. And yet, more recent ads show Brooke Shields cuddled on a colorful settee, trying to “live life comfortably.” La-Z-Boy has repositioned itself to build awareness of their much wider variety of furniture beyond recliners. In 2005, Todd saw an opportunity to re-position his business. Doug and Ann Truhlar were looking to sell Town and Country Interiors, which featured consulting for interior decorating. All agreed, Earl Johnson’s would be a perfect fit. Todd says the expansion into design consulting was the way to go: “People aren’t afraid to buy, they’re afraid to buy WRONG.” The Town and Country option would help those customers “buy right.” Eventually Town and Country was brought downtown from its North Broad Street location, and moved into what used to be the store’s clearance center. That proved to be an excellent decision when housing slowed down during the Great Recession. Todd says their business was insulated in 2008 and 2009 by a shift to remodeling that used the services of Town and Country. He adds, our whole region has benefited from the high price of corn and the strong ag economy that has helped support the local economy. Today, Earl Johnson Furniture employs thirteen people, including Todd’s wife, Mary and her brother, Ken Bjorklund, along with Todd and Mary’s sons, Matt and Eric. The business encompasses 24-thousand square feet on the three floors of the original brick building, with another seven-thousand across the street in the bedding store and Town and Country. There’s ten-
38 • november 2012 • MN Valley Business
thousand more square feet in a warehouse on Third Avenue. Inventory management was changed by the events of 200809. Todd says, for example, they decided to no longer stock four identical sofas in different colors. Instead, they stock one sofa, and buyers can look at options from a catalog, and have it shipped in 30 - 45 days.
Time for family Earl loves fishing. Fishing, he says, was the remedy for stress back in the early days — it took his mind off business. For years starting in the 70s, Earl would be at the store from 7 a.m. until 5 p.m., then would head for the lake and fish until well after dark. Did fishing teach him anything about the furniture business? Only that you need to have some down time to survive. Son Todd says he learned that lesson, too, that you need a private life and family time. Time to watch your kids’ activities. Matt captained the 2005-06 West hockey team, while Eric played lacrosse. One of the advantages of being downtown is, it’s a short walk to see Maverick hockey games at Verizon Wireless Center. The store is a big supporter of “Goals for Kids,” which helps youngsters afford to play hockey. The family that played together, stayed together in business. Matt, sitting in on the discussion, says he’s very happy to be co-managing the bedding store. He and his brother represent the fourth generation in the business. There’s even talk about whether a 21-month-old great grandson could make this a five-generation local business. Todd knows that would be a rarity, that even getting past the third generation is unusual. But the demand will be there, as will the opportunity. After all, who doesn’t need furniture?
MV
Profile
Mattie Eggimann is General Manager of the 151-room City Center Hotel.
Centered on hospitality Eggimann focuses on customer satisfaction at City Center Hotel
By Marie Wood Photos By John Cross
M
attie Eggimann is the first woman general manager at Mankato City Center Hotel, where she oversees 151 rooms, events and weddings 30 to 35 weekends a year, conventions that book up the spring and fall, and 60 to 80 employees at any given time. And Eggimann is under 30 years old. In July, at age 27, Eggimann was promoted from food and beverage director to general manager. Eggimann’s success is well-earned from years of experience in food service, a fair management style and a passion for her work. “I am an extremely hard worker. I have a really strong work ethic. I am eager to learn,” said Eggimann. “As an employee, I take responsibility for mistakes that I have made. I don’t make excuses and I don’t blame things on other people.” Eggimann worked her way through high school and college in food service: fast food, casual dining and catering. She worked for Panera Bread, hilltop Hy-Vee Kitchen and others. In 2008, Eggimann was hired as the assistant food and beverage manager at the Best Western Plus in North Mankato. Best Western Plus, Mankato City Center Hotel and Holiday
40 • november 2012 • MN Valley Business
Inn Express on Mankato’s hilltop make up HotelsMankato. com owned by Doug Anderson. In 2010, Eggimann was promoted to food and beverage director at the Mankato City Center Hotel. At both properties, Eggimann was responsible for events and a full service restaurant and bar, which she described as fun and sometimes overwhelming. “My parents were hard workers with a strong work ethic. I grew up in a household where caring about what you do and putting your heart in what you do was valued,” said Eggimann Moving into the general manager position has been an exciting challenge as she learns to successfully manage a hotel, analyze revenue, and master the hospitality industry. Eggimann is grateful that Anderson hired from within and gave her this opportunity. “She’s done a good job, she understands organizational policy well and has a good background in food and beverage from the back of the house to the front of the house, which is a sought-after set of attributes,” said Anderson. “That was a promotion waiting to happen.”
Tourism Eggimann and all local hotel managers have experienced an uptick in tourism. As
Profile
part of her role as general manager, Eggimann is involved in community efforts to promote Mankato. “The City and the CVB are trying really hard to get people to come to visit Mankato,” said Eggimann. Mankato City Center Hotel was booked for the Mankato Marathon and logged an increase in overnight business for Vikings Training Camp. She meets rock and country stars who spend the night or get a room for their bus driver. Eggimann said she believes the Vetter Stone Amphitheater has the potential to bring more visitors to Mankato. From the late 1970s to 2009, Mankato City Center Hotel was a Holiday Inn. Being an independent hotel offers more marketing freedom. Over the past 10 years, the nature of the hospitality business has changed from people making reservations on corporate The hotel includes a bar and the adjoining 101 Main restaurant. 1-800 central reservation lines to online booking through third party web sites, explained Eggimann. Becoming GM For instance on Booking.com and Expedia.com, Mankato As food and beverage director, Eggimann worked many late evenings and weekends, but she has adjusted to standard City Center Hotel is one of the first hotels listed in a Mankato weekday hours as general manager. Sometimes she stays late or search. In 2009, all rooms were remodeled so everything from floor works weekends for large events and weddings. “The greatest reward for me is to see all the pieces of the to ceiling is new. Having completed the Best Western puzzle come together — food and beverage, housekeeping, housekeeping training, Eggimann said most hotel rooms are front desk, and maintenance working together to get through cleaner than people’s homes as they are so thoroughly cleaned a busy weekend or event,” said Eggimann. “You know and disinfected. “People don’t realize how clean they are. People don’t realize everybody worked really hard to make the event go even better how hard housekeepers work to make sure the room is clean for than expected.” Eggimann can pitch in anywhere in the hotel. You might them,” said Eggimann. The Mankato City Center Hotel is remodeling the public find her hosting or waiting tables at the hotel restaurant — 101 Main — during the weekday lunch rush. Eggimann is quick to areas of the hotel, which should be completed by the end of remind locals that the 101 Main is still open and offering a this year. “It’s going to totally change the look of the hotel so I’m really Sunday brunch buffet. “We have a really excellent chef, good food, a salad bar and excited,” said Eggimann. MV lunch buffet Monday through Friday,” added Eggimann. Day-to-day Eggimann oversees operations, helps out in housekeeping and front desk during peak times, resolves employee issues and completes administrative tasks. “Everyday is really different. I come in most days with a mental list of what I’ll do. I have to always be on my toes ready to respond to what happens. Days never go as planned,” said Eggimann. Eggimann’s youth does not hinder her as a manager. She strives to treat employees fairly and hold them accountable. Working in food service, Eggimann has seen many management styles and learned early that a manager should never show favoritism. “I always try to treat everyone fairly and respectably,” said Eggimann. “People respond to me as a person of authority, but they are not intimidated by me.”
The hotel is attached by skyway to the Verizon Wireless Center.
MN Valley Business • november 2012 • 41
All in the Family Doug and Karen Paape and their daughter Jakki.
Keeping the heat on Paape family works together to expand services By Marie Wood Photos By John Cross
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n 1948, Elden Paape opened a one-man shop to repair and service boiler systems. Today, Doug and Karen Paape operate Paape Cos. in Mankato, a corporation with a workforce of 50 and a branch office in Rochester. Paape Companies has three divisions: distributing, energy and security services. Paape designs, installs and maintains heating and cooling systems, the controls to operate the systems and security systems. As an authorized dealer, Paape provides the equipment that operates health care, education, industrial, retail and government buildings across the region. The Paapes rely on a staff of certified pipe fitters, welders, installers, engineering
42 • november 2012 • MN Valley Business
technicians, electricians, computer programmers and project managers. Doug began working alongside his father in the 1960s. He married Karen in 1988 and she joined the company in 1995. In 1997, Karen hired Executive Office Manager Sharon Hancock, the office mother who takes care of every one and keeps things running smoothly. Their daughter Jakki Paape, 23, shares an office with her mom and has taken on accounting and administrative duties. Jakki’s fiancé, Scott Laughter, is an apprentice electrician in the company. Many a freezing winter night, Karen and Jakki would join Doug on service calls to fix boilers.
MVB: Doug, did you grow up working in the company? What was that like? Doug: I grew up working in the company. My twin brother and I would get my mom upset and when my dad would go to service calls in the school, my mom would tell my dad to take us along. In those days, the boiler rooms in schools were like dungeons. We’d watch him get this big old boiler working. At the time, I thought that wasn’t for me, because I saw his long hours. But when dad came to me to say he’d like me to join the company, that was very exciting. My dad and I had a really good relationship. As us twins were growing up, we got involved and helped him on jobs. He used us as laborers. MVB: Doug, what was it like servicing boilers in the 1960s? Doug: When I could start going on service calls, he (Elden) always made sure I knew where he’d be. There were no cell phones in those days. If I had an issue, I could call him from the school office or a pay phone. He was loyal to making that work. MVB: Karen, what was your role when you joined the business? What is your role today? Karen: I did the accounting. Now I do less of it. Now I come in and check with Sharon or Jakki and see if there are any issues. It’s relaxed. I can come and go. When I joined, Doug’s dad was retiring, and he wanted a sounding board. He did that with his dad every morning. They would get together and talk about the day. After he retired, Doug wanted me to do that.
MVB: What is your greatest business achievement? Doug: One of the neat things is for Karen to get involved in this company with me. Then you’ve really got a partner. And Jakki working here, that’s a really neat thing. Sharon has been here a number of years. They’ve done so much to hold everyone together and keep employees happy. They’ve played a big role in that. Without the right employees, it doesn’t happen. MVB: What makes you successful business partners? Doug: We get along really well. Karen: I’m a good listener. Doug: We do everything together from the time we get up, have breakfast, come to work together, we put up with each other really well. Karen: Yes, we do.
Paape was founded by Doug’s father, Elden, in 1948. MVB: Karen, what is Doug’s greatest strength? Karen: Determination. He wants things done right. He’ll make sure that’s going to happen. He’ll stay with it to the end. MVB: How do you balance business and family? Karen: I guess because we’re all so close. Jakki and I love coming into work and seeing each other everyday. We try not to go home and talk about business all night. MVB: Are you thinking about retirement? Karen: We talk about it. Doug: We don’t put the time in like we used to. We have some really good people who can run this business. We do get away and stay away. MVB: Jakki, what is the most important lesson you learned from your parents? Jakki: There are so many. They’re just really good people to every one. MV
MN Valley Business • november 2012 • 43
All in the Family
“I liked the company,” said Doug. “It could be a long winter.” “We’d park by the Dumpster. You always knew where the boiler room was, because it was next to the Dumpster,” said Karen. “I remember that. I’d camp out in the back seat with my CD player and snacks,” said Jakki. Opening the Energy Services division, which automates buildings for efficient energy use, was a turning point when “things fell into place,” explained Doug. “We had really some good people who came to work with us and stuck with us. They’re here yet,” said Doug. In 1996, the office building was hit by lightning and consumed by fire during the night. Sadly, Elden got sick and died before the new building was built and the Energy Services division took off. “Your parents set the groundwork to give you the opportunity to even do this. And there were some hard times,” said Doug.
Business Memos/Company News
Rubish named civil trial specialist The Minnesota State Bar Association announces the certification of Renee C. Rubish, Maschka, Riedy & Ries Law Firm in Mankato, as a MSBA Board Certified Civil Trial Law Specialists. This Certification program is administered by the MSBA and approved by the State Board of Legal Certification. The certified specialist designation is earned by leading attorneys who have completed a rigorous approval process, including an examination in the specialty area, peer review, and documented experience. This achievement has been earned by fewer than 3 percent of all licensed Minnesota attorneys. ■■■ Merrill earns anti-money laundering certification Eide Bailly announced that Cory Merrill has earned the Certified Anti-Money Laundering Specialist certification. Merrill earned the CAMS credential from the Association of Certified Anti-Money Laundering Specialists. The CAMS credential denotes proven knowledge in the detection and prevention of money laundering. ■■■ MTU Onsite earns Bronze Award MTU Onsite Energy of Mankato has received a Bronze Award in Consulting-Specifying Engineer magazine’s eighth annual Product of the Year competition for itsÊdiesel-powered generator set based on the MTU 8V Series 1600 engine. The generator set brings enhanced levels of fuel efficiency, durability and flexibility to the 400 kW power node, used for mission-critical standby generators. MTU Onsite Energy also received Product of the Year Awards in 2008 and 2010. ■■■ Meyers named CEO of OFC Andrew R. Meyers was recently named CEO of the Orthopedic and Fracture Clinic. Meyers joined OFC in 1990 in the Mankato office. In addition to working in OFC’s Owatonna office, he also assisted in surgery and clinic in Northfield and Faribault. He went on to receive his MBA in 2006. ■■■ Spaude joins Eide Bailly Eide Bailly announced that Ryan Spaude has joined the Mankato office as a Financial Advisor. He brings with him more than 16 years of experience in the financial services field. Spaude will provide financial planning, investment management and insurance services. ■■■ Enventis earns certification HickoryTech subsidiary Enventis has achieved the Cisco Master Managed Services Certification. This certification recognizes Enventis’ investment in the ITIL processes, practices and tools necessary to provide high-quality managed services. As a Cisco Master Managed Services Certified Partner, Enventis has demonstrated the ability to deliver sophisticated solutions, met stringent requirements that reflect a depth of capabilities, and undergone an independent audit by an objective third-party auditor.
44 • november 2012 • MN Valley Business
HickoryTech increases dividend HickoryTech Corp. declared a quarterly dividends of $0.145 per share of HickoryTech common stock, representing a 3.5 percent increase from the previous $0.14 per share dividend. The dividend is payable on Dec. 5, 2012 to shareholders of record on Nov. 15, 2012. ■■■ Local firm creates Muhammad Ali Center site Three-time heavyweight boxing champion and social activist Muhammad Ali’s international cultural center has a new brand and website, designed by a local design firm. Envision: Design That Works of St. Peter developed a brand strategy and subsequent website, alicenter.org, and other materials to increase awareness and accessibility to the legacy of Muhammad Ali. “We designed the Center’s website and brand to reflect Muhammad Ali’s principles while providing an exciting, highly interactive experience for anyone who wants to know more about one of the most dynamic people who has ever lived,” said Envision principal Liz Beaudry. On the web: thinkenvision.com. ■■■ ProGrowth features Nicollet native’s art ProGrowth Bank has purchased a 15-piece photographic collection by Wendy Zins Photography to adorn the walls of their recently renovated facility in Nicollet. In the “My Home Town,” collection, Zins captures the essence and spirit of life in the small rural farming community of Nicollet. Zins, a Nicollet native who now lives in the Twin Cities, captured these photos over the course of 25 years during the time she was a resident and then in frequent visits to her hometown. The collection features landscapes, graphic images and portraiture. Pieces include a cornfield, a country road, a horse pasture, and a sunset over Swan Lake. ■■■ Embacher accepted in leadership program Barbara Embacher, vice president of Greater Mankato Growth, was accepted to participate in the Minnesota Chamber of Commerce Advanced Leadership and Professional Development program for local chamber professionals. The program, which includes a competitive application, is designed for emerging leaders in the chamber of commerce profession who are committed to developing their professional leadership capabilities. ■■■ Peterson named Best Lawyer Douglas R. Peterson, shareholder of Leonard, Street and Deinard and head of the law firm’s Mankato office, has been named among The Best Lawyers in America. He was singled out for his national reputation as a business litigator, specifically in the area of white collar defense. Peterson is one of 58 attorneys from the firm’s five offices included in the 2013 rankings of the top lawyers across the country. ■■■ MRCI receives highest accreditation MRCI WorkSource, a leader in adult rehabilitation, has been awarded a three year accreditation from CARF
International. This certification represents the highest level of accreditation that can be awarded to an organization by the Commission on Accreditation of Rehabilitation Facilities. MRCI has been continually accredited by CARF since 1972. Over the last year, MRCI has employed over 4,000 people across southern Minnesota and the Twin Cities. ■■■ Mayo-Mankato VP named to board Peter Pytlak, Mayo Clinic Health System in Mankato vice president of public affairs and marketing, was recently appointed to serve a three-year term as a representative on the Minnesota Department of Health’s Minnesota e-Health Advisory Committee. The committee, which is comprised of members of Minnesota’s health care community, makes recommendations to the commissioner of health on policies and strategies that improve public health, deliver health information to consumers and connect health care providers through the use of electronic medical records. ■■■ Bremer promotes Lentz Bremer Bank promoted Tom Lentz to senior lender for the Mankato and Owatonna markets. Lentz, who has more than 27 years of banking experience, will also oversee all credit administration operations as part of his new responsibilities. Bremer opened the Mankato location in September 2011 and is scheduled to open a new bank in Owatonna later this month. ■■■ Verizon donates to CADA As part of the company’s national HopeLine program, Verizon Wireless donated $6,000 to the Community Against Domestic
Abuse (CADA), a Mankato-based organization that serves individuals and families impacted by domestic violence, sexual assault and child abuse. The donation was generated by a $20 match for the first 300 employees who signed-up for the company’s Walk for Hope at the Mankato Customer Service Center. The grant will be used to support new therapeutic counseling services for adults and youth in south central Minnesota that have experienced domestic and/or sexual abuse. ■■■ AgStar doubles EMS grant program The AgStar Fund for Rural America awarded $127,835 in grants to 94 communities through the Emergency Response Equipment Grant Program. Due to the great need and large volume of applications, the AgStar Fund doubled the amount of departments served and increased the budget for this program by 25 percent. Grants for up to $2,500 are awarded for funding equipment for volunteer fire, rescue and ambulance squads in AgStar’s 69 county service area. Area communities’ fire departments receiving grants were: Bricelyn, Butterfield, Le Sueur, Comfrey, Darfur, Delavan, Kiester, Kilkenny, Lafayette, Lake Crystal, South Bend Township, St. Clair, St. James and Truman.
To submit your company or employee news. e-mail to tkrohn@mankatofreepress.com Put “Business memo” in the subject line. Call or e-mail Associate Editor Tim Krohn at tkrohn@mankatofreepress.com or 344-6383 for questions.
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